<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997; OR
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[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________
Commission File No. 0-11538
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OVERSEAS PARTNERS LTD.
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(Exact name of registrant as specified in its charter)
Islands of Bermuda N/A
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(State or other jurisdiction of incorporation (I.R.S. Employer Id. No.)
or organization)
Mintflower Place, 8 Par-la-Ville Road, Hamilton, HM GX, Bermuda
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(Address of principal executive offices)
441-295-0788
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(Registrant's telephone number, including
area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
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(Title of Class)
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 ___.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)299.405 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]
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant, based on a price per share of $17.00, the price per share as of
January 8, 1998, at which the Registrant has rights of first refusal for the
purchase of its shares offered for sale by shareowners, was $2,132,243,496 as of
February 28, 1998.
The number of shares of Registrant's Common Stock outstanding as of
February 28, 1998 was 131,000,000.
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PART I
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Item 1. Business
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Established in 1983, Overseas Partners Ltd. ("OPL") is one of the world's
largest multi-line reinsurance companies. Specializing in non-catastrophe lines
of reinsurance, OPL provides shipper's risk, property, workers' compensation,
automobile, aviation, marine, finite risk and other specialty reinsurance
products. Overseas is also engaged in the real estate, leasing and hotel
business. Overseas' headquarters is located in Bermuda and its stewardship and
reinsurance activities are conducted from Bermuda, one of the world's foremost
reinsurance markets.
Overseas' primary source of business is reinsurance. Its largest single
reinsurance program is the reinsurance of Shipper's Risk insurance issued by
United States based insurance companies covering loss or damage to packages
carried by subsidiaries of UPS. In addition, Overseas offers various types of
reinsurance to a number of insurers. Currently, Overseas has treaty
relationships with Hannover Re, Liberty Mutual Fire Insurance Company,
Prudential Property and Casualty Insurance Co., American International Specialty
Lines Insurance Co., Motors Insurance Corporation, Associated Industries
Insurance Company, Inc., M.E. Brockbank Esq., ERC Frankona, Lexington Insurance
Company, QBE International Insurance Limited, Mutual Marine Office, Life
Reinsurance Corporation and several leading Lloyd's syndicates. Overseas
reinsurance business is carried on by OPL and by Overseas Partners Re Ltd. ("OP
Re"), a wholly-owned subsidiary. Both OPL and OP Re are Class III reinsurers
under the laws of Bermuda.
OPL's United States based subsidiary, Overseas Partners Capital Corp.
("OPCC"), is engaged in the real estate and leasing and hotel businesses. See
Leasing, Real Estate and Hotel Activities at page 7 hereof.
Information concerning Overseas' identifiable assets, revenues and
operating income relating to Overseas' reinsurance and real estate and leasing
activities is set forth in Note 9 in the Notes to Consolidated Financial
Statements. See "Item 8 -- Financial Statements and Supplementary Data" below.
<PAGE>
REINSURANCE ACTIVITIES
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Reinsurance of Shipper's Risk Insurance
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Generally, UPS customers who wish to insure their packages for amounts
greater than $100 may do so by paying a premium of 35 cents per $100 of declared
value (or their equivalents in non-US currencies) with similar arrangements
internationally. Shipper's Risk insurance premiums on packages carried in the
United States are remitted on the shipper's behalf to United States based
insurance companies who provide the primary insurance against the risks of loss
or damage in excess of $100 to the shipper's packages, unless the shipper
directs otherwise. Similar arrangements are in effect for international origins
and destinations.
This insurance is currently reinsured by OPL, for which it receives
premiums equal to the excess value charges received by the primary insurer less
a ceding commission and certain taxes and expenses. OPL reimburses the primary
property and casualty insurer for the losses it pays on the Shipper's Risk
insurance. Earned premiums from Shipper's Risk reinsurance constituted 57.4%,
71.8% and 77.6% of Overseas' reinsurance premiums earned in 1997, 1996 and 1995,
respectively.
The reinsurance of Shipper's Risk insurance does not involve transactions
between UPS and OPL. National Union Fire Insurance Company, New Hampshire
Insurance Company, Abeille General Insurance Company and Nichido Fire and Marine
Insurance Company, subsidiaries of American International Group, Inc. ("AIG"),
insure customer packages in return for premiums paid by the customers. All of
the primary insurers have been assigned ratings of A++ (superior) by A. M. Best
Company, Inc., a leading analyst of insurance companies.
Other Property and Casualty Reinsurance
- ---------------------------------------
Overseas' other property and casualty reinsurance business grew
significantly in 1997. Reinsurance premiums written for other reinsurance
amounted to over $353 million, an increase of 97% over 1996. The types of Other
Reinsurance OPL and OP Re participates in includes property, workers'
compensation, automobile, aviation, marine, finite risk and other specialty
reinsurance products.
OPL reinsures workers' compensation insurance for employees of a UPS
subsidiary located in the State of California. The primary insurer is Liberty
Mutual Fire Insurance Company, an affiliate of the Liberty Mutual Group, which
was assigned a rating of A (excellent) by A. M. Best Company, Inc. OPL's
liability is limited to $500,000 per occurrence. Overseas also reinsures
workers' compensation insurance underwritten by Associated Industries Insurance
Company, Inc. In 1997, workers' compensation reinsurance premiums written
increased $37.6 million primarily as a result of the Liberty Mutual policy
period including eight months in 1996 compared to 12 months in 1997.
Sixteen new reinsurance arrangements were added to Other Reinsurance in
1997. Eight of these new programs were additions to the property line of
business. Gross premiums written of $98.7 million were produced by establishing
relationships with M.E. Brockbank Esq., ERC Frankona, Lexington Insurance
Company and QBE International Insurance Limited. OPL also expanded its business
with Prudential Property and Casualty Insurance Co. and Motors Insurance
Corporation. Two new automobile liability programs were written in 1997,
generating $23.6 million in premiums written. Aviation and marine, one of OPL's
new lines of reinsurance, added five new programs in 1997. $37.7 million in
premiums were generated by working with several leading Lloyd's syndicates as
well as ERC Frankona and Mutual Marine Office, Inc. For the first time, medical
benefits reinsurance business was written through a program with Life
Reinsurance Corporation.
2
<PAGE>
In 1997, OPL renewed, or continued to participate in, many of the programs
reinsured in 1996. Among them are U.S. homeowners policies with Prudential,
worldwide commercial property with Hannover Re and automobile property and
liability with Motors Insurance Corporation.
During 1997, six programs with premiums of $41.8 million were not renewed
and are currently in run-off.
All of the above companies were assigned, where available, a rating of B++
(very good) to A++ (superior) by A. M. Best Company, Inc.
In December 1997, OPCC acquired the assets and liabilities of Parcel
Insurance Plan, LP, a St. Louis-based independent insurance agent that manages
the general underwriting of excess value packages for shippers of small parcels.
Information concerning reinsurance premiums written, earned premiums and
net underwriting income for the years ended 1997, 1996 and 1995 can be found in
Overseas' Statements of Consolidated Income and in Note 9 of the Notes to the
Financial Statements included in "Item 8 -- Financial Statements and
Supplementary Data".
Factors Affecting Overseas' Reinsurance Business
- ------------------------------------------------
An important aspect of Overseas' Shipper's Risk reinsurance business is
that it does not expose Overseas in any material way to unanticipated sources of
liability because Overseas' liability is limited, like the primary coverage, to
the declared value of a lost or damaged package. In its other lines of
reinsurance, Overseas seeks highly predictable underwriting results or purchases
excess coverage that will limit losses to acceptable amounts. The primary
insurers whose business OPL reinsures are major international insurance
companies which are highly rated by leading analysts of insurance companies and
are unaffiliated with Overseas.
Overseas expects to continue to participate in other areas of reinsurance
and will continue to offer reinsurance for risks if appropriate opportunities
arise. The Shipper's Risk reinsurance described above, which contributed over
32.0% of Overseas' revenues in 1997, has historically been OPL's largest source
of revenue. There can be no assurance that UPS or its subsidiaries will
continue to offer the Shippers' Risk insurance to its customers, or, if so
offered, that the primary insurers will continue to reinsure with OPL, and there
can be no assurance that UPS will continue to use workers' compensation
insurance arrangements for which Overseas provides reinsurance, or that those
primary insurers will use OPL.
UPS regularly reviews its package and worker's compensation insurance
programs, and its relationships with its primary insurers, in view of cost,
competition and other factors, and may make changes in such programs at its
discretion. An adverse resolution of the federal income tax matter referred to
in Note 2 in Notes to the Consolidated Financial Statements included in "Item 8
- - Financial Statements and Supplementary Data", could also impact UPS's package
insurance practices.
In common with industry practice, Overseas establishes estimates of
ultimate losses in connection with its reinsurance obligations and periodically
reviews those estimates. To date, Overseas has not experienced any material
adjustments to reserve estimates for prior periods. However, it should be noted
that Overseas' liability in respect of its reinsurance business is subject to
the effects of catastrophic events.
3
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The Property and Casualty Reinsurance Industry and
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Overseas' Position Therein
- --------------------------
Property and casualty insurance companies provide protection for insureds
against the risks of damage or loss to property or legal liability to third
parties. In consideration of the payment of premiums by the insureds, the
insurance company provides the specified indemnity. Usually, significant
periods elapse between the receipt of premiums and the payment of losses, during
which time the insurance company invests the funds held for the payment of
losses. The insurance company's ability to achieve earnings is thus based on
the amount by which the total of its earned premiums and investment income
exceeds its provisions for losses and costs of operations.
The international property and casualty insurance markets are highly
competitive, and in those markets, there are many insurance companies, none of
which dominates the industry. Competition has been especially intense in the
international reinsurance markets and as a result, premium rates on certain
reinsurance lines of business have fallen significantly over the past two years.
These markets have suffered in previous years due to the high incidence of
catastrophic events.
Treaty reinsurers rely on the underwriting standards of the primary
insurers which they select to reinsure and bear the risk of loss if the primary
insurer writes the insurance at inadequate prices. In addition, the reinsurer
is obligated to pay the primary insurer the amount at which claims are settled
by the primary insurer without participating in the settlement process.
Most of Overseas' reinsurance agreements call for reinsurance premiums and
settlements to be paid in United States dollars. In addition, its investments
are primarily made in United States dollar denominated securities. OPL and OP
Re are exempt from Bermuda's currency exchange controls. Their assets are
located and their operations are conducted in countries in which, in their
opinion, the risks of expropriation are not substantial.
Regulation
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Insurance companies are generally regulated by the jurisdictions in which
they operate. OPL and OP Re do not operate as insurance companies within or
subject to the insurance laws of any jurisdiction of the United States or of any
foreign jurisdiction other than the Islands of Bermuda.
OPL and OP Re are subject to regulation under Bermuda law which, among
other things, requires them to register and comply with certain requirements as
to capitalization. For purposes of Bermuda insurance law and regulation, OPL
and OP Re are considered to be engaged in both long-term business and general
business. The minimum paid up share capital required to be maintained by OPL
and OP Re under Bermuda insurance law and regulations is $370,000. Moreover,
OPL and OP Re must prepare an annual statutory financial return and statutory
financial statements in accordance with the requirements of the Bermuda
Insurance Act of 1978, amendments thereto and related Regulations, and an annual
audit is also required.
4
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In addition, OPL and OP Re are individually required to maintain a
minimum solvency margin at least equal to $250,000 plus the greater of: (i) the
aggregate of $1.2 million and 15% of the amount by which net premium income from
general business exceeds $6 million; or (ii) 15% of the aggregate of loss
expense provisions and other general business insurance reserves. As of
December 31, 1997, OPL and OP Re had more than $1.7 billion and $536.2 million,
respectively, of statutory capital and surplus in excess of these requirements.
Minimum statutory capital and surplus for OPL and OP Re is $1.25 million and
$1.0 million, respectively. Regulatory approval is required to reduce total
statutory capital, as set out in the previous year's financial statements, by
more than 15%.
Bermuda insurance law and regulations do not limit the categories of
assets in which an insurance company may invest. However, certain categories of
assets, such as unquoted equities, investments in and advances to affiliates,
real estate and collateral loans, are not "relevant assets" for purposes of
complying with the minimum liquidity ratio with respect to OPL's and OP Re's
general business activities. The exclusion of these types of assets from the
definition of relevant assets does not materially affect their ability to
satisfy the minimum liquidity ratio. OPL met these requirements for the years
ended December 31, 1997, 1996 and 1995, and OP Re met these requirements for the
years ended December 31, 1997 and 1996.
Although the extent of regulation varies among jurisdictions within the
United States, an insurance company doing business in the United States must
comply with a more extensive array of laws and regulations than do OPL and OP
Re. In the United States, insurers and their agents usually must be licensed,
and the policy forms used by an insurer usually must be approved. Laws and
regulations in most states also govern rates, solvency and standards of business
conduct. Most United States jurisdictions require insurance companies to file
detailed annual financial statements with supervisory agencies, and their
operations and accounts are subject to examination by such agencies. Such
jurisdictions also regulate the form and content of statutory financial
statements and the type and concentration of investments. Furthermore, most
states and the District of Columbia require insurance companies to support
guaranty associations, which are organized to pay claims against insolvent
insurance companies. Finally, state regulated property and casualty insurers
are required to participate in assigned risk pools to write coverages on risks
not acceptable under normal underwriting standards.
Because OPL and OP Re conduct their businesses as reinsurers in Bermuda,
they are not subject to the insurance regulatory requirements of jurisdictions
other than Bermuda. However, the statutory accounting standards adopted by the
jurisdictions which regulate the companies to which OPL and OP Re provide life,
property and casualty and other reinsurance affect OPL and OP Re indirectly.
OPL and OP Re record such transactions on their statutory accounts in a manner
which complies with statutory accounting principles required by the Bermuda
Insurance Act of 1978.
5
<PAGE>
REAL ESTATE, LEASING AND HOTEL ACTIVITIES
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OPCC is engaged in the real estate, leasing and hotel businesses and has
offices in Bermuda and the United States. OPCC continued to expand its
operations in 1997 through the creation of its own property management company,
and maintains its United States headquarters in Atlanta, Georgia to assist in
the management of its business affairs. OPCC's leasing, real estate and hotel
assets exceeded $1.3 billion at December 31, 1997, a growth of approximately 3%
over 1996 levels and 90% over 1995 levels.
In a finance lease transaction held in partnership with GATX Capital,
OPCC purchased a 50% interest in 493 hopper rail cars ("Hopper Cars") and the
lease thereon in 1993, for a purchase price of approximately $4.5 million in
cash and the assumption of a proportionate amount of non-recourse indebtedness
of approximately $606,000, which amount was paid off in 1994. The Hopper Cars
are currently leased to Bessemer & Lake Erie Railroad Company ("Bessemer & Lake
Erie"). The lease expires in 2001 and annual rentals under the lease are
approximately $909,000.
In another finance lease transaction in 1994, OPCC purchased all of the
limited partnership interests, and all stock of the corporate general partner,
of KMS II Realty Limited Partnership, a Delaware Limited Partnership ("KMS II").
KMS II owns a 1.5 million square foot regional distribution facility in Manteno,
Illinois (the "KMart Facility"), which it leases to KMart Corporation. OPCC
purchased the interests in KMS II for approximately $6.7 million in cash and the
assumption of approximately $40.3 million in non-recourse debt, which was
approximately $34.9 million as of December 31, 1997. The initial term of the
KMart lease expires in 2020 and yearly lease payments are approximately $4.2
million. After the initial term, KMart has the option to extend the lease for
ten consecutive terms of five years each. KMart has the option to purchase the
KMart Facility at the end of the initial term of the lease for a price equal to
the fair market value of the KMart Facility on that date.
OPCC leases to UPS five Boeing 757 air package freighters and a 435,000
square foot facility located on approximately 39 acres of land in Mahwah, New
Jersey (the "Ramapo Ridge Facility"), which UPS is using as a data processing,
telecommunications and operations facility.
United Parcel Service Co. ("UPS Co."), a certified air carrier subsidiary
of UPS, is responsible for all ground facilities, certain aircraft maintenance,
and air transportation safety and standards for all of the aircraft leased from
OPCC. OPCC is responsible, at its own expense, for the performance of certain
periodic heavy maintenance. The payments due under the lease are then adjusted
every three years to reflect the actual maintenance costs, so that OPCC receives
the same net economic return over the life of the lease, and each year the
payments for maintenance costs are adjusted to reflect increases or decreases in
the inflation rate (as measured by the United States Gross National Product
Implicit Price Deflator). Additionally, OPCC is responsible for the payment of
all costs over $50,000 for corrective work undertaken to comply with FAA
Airworthiness Directives and mandatory notes and bulletins. OPCC also pays the
cost of insurance for each of the aircraft.
The five Boeing 757 aircraft were delivered to OPCC in 1990 pursuant to a
purchase agreement with the manufacturer which had been assigned for fair market
value by UPS to OPCC in 1989. The aircraft are leased to a UPS subsidiary for a
term ending in 2012.
6
<PAGE>
In 1991, the Ramapo Ridge Facility (the "Facility") was completed and
placed in operation by UPS. The Facility is leased to United Parcel Service
General Services Co. ("GSC"), a subsidiary of UPS, and the initial term of the
lease expires in 2019. OPCC is responsible, at its own cost and expense, for
the maintenance of the grounds on which the Facility is located and of the
outside walls, roof and structural components of all buildings comprising the
Facility. GSC is responsible for all other maintenance at the Facility. OPCC
is responsible, at its own expense, for maintaining insurance on the Facility
and certain types of liability insurance.
OPCC completed construction on an addition to the Ramapo Ridge Facility
in 1995. The project scope included the construction of a 27,000 square foot
addition with space available for future expansions of up to 54,000 square feet.
GSC began operations on the addition during the first quarter of 1996. The
financing of the Ramapo Ridge Facility appears in "Item 2 -- Properties."
Rent on the five Boeing 757 aircraft and the Ramapo Ridge Facility has a
fixed component and a variable component, based on the extent to which the
assets are utilized by UPS's subsidiaries. The total rent from aircraft leases
between OPCC and UPS Co. in 1995, 1996 and 1997 was $24.1 million, $23.3 million
and $22.5 million, respectively, and the total rent from the Facility lease in
1995, 1996 and 1997 was $16.3 million, $20.0 million and $19.8 million,
respectively. The fixed and variable components of the aircraft leases and
Ramapo Ridge Facility lease for 1997 are set forth below. For further
information regarding the fixed component of rent see Note 5 to the Consolidated
Financial Statements included in "Item 8 --Financial Statements and
Supplementary Data."
1997 Lease Revenues
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(amounts in millions)
Fixed Variable
Component Component
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Aircraft $17.2 $ 5.3
Facility $ 7.3 $12.5
For further information concerning the acquisition and lease of the
aircraft and the Ramapo Ridge Facility see "Item 13 -- Certain Relationships and
Related Transactions."
The acquisition of the Boeing 757 aircraft and the Ramapo Ridge Facility
were financed by two series of privately-placed, fixed rate, non-callable bonds
issued by OPL Funding Corp. ("OPL Funding"), a United States special purpose
subsidiary of OPCC incorporated in Delaware. One series, in the principal
amount of $171.6 million, is due in 2012; the other, in the principal amount of
$73.4 million, is due in 2019. The fixed component of the rentals for these
assets has been irrevocably assigned to OPL Funding and is used by it to
collateralize a portion of the obligation on the bonds. The principal of these
bonds is guaranteed by Overseas Partners Credit, Inc. ("Overseas Credit"),
another special purpose subsidiary of OPL incorporated in the Cayman Islands.
Overseas Credit's obligations are secured by zero coupon U.S. Treasury bonds
owned by it and pledged as security to the Trustee for the bondholders. On or
prior to the scheduled maturity date of each series of bonds, the zero coupon
U.S. Treasury bonds will mature in amounts equal to or exceeding the principal
amount of the bonds in that series. In connection with the foregoing, OPCC
pledged its interest in the aircraft and the facility and the related leases to
OPL Funding, which in turn pledged its interest therein to further secure the
bonds.
7
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Effective December 31, 1993, OPCC acquired the Marriott Copley Place
Hotel in Boston, Massachusetts (the "Hotel"). This is a full service, luxury,
convention hotel with 1,139 rooms and 44,000 square feet of meeting and
convention space. In 1996, the existing indebtedness on the Hotel was
refinanced with a 10-year, non-recourse loan in a principal amount of $110
million with Metropolitan Life Insurance Company which was approximately $107.4
million as of December 31, 1997.
For a description of OPCC's acquisition of its interests in the Marriott
Copley Place Hotel, see Item 2 of OPL's Report on Form 8-K dated January 12,
1994, which is incorporated by reference herein.
On November 15, 1995, OPCC acquired One Buckhead Plaza ("OBP"), a 20-
story office and specialty retail tower located in the heart of Buckhead, the
geographic center of Atlanta, Georgia. OBP is approximately 91% leased. The
purchase price has been allocated to the various asset categories, following an
independent appraisal. OPCC also has a purchase option on adjacent tracts of
land totaling almost 14 acres for five years and a right of first refusal for
ten years. The OBP purchase was financed, in part, with a $35 million, 10-year,
non-recourse loan with Metropolitan Life Insurance Company which was
approximately $33.9 million as of December 31, 1997.
On August 30, 1996, OPCC, through a subsidiary, acquired the Atlanta
Financial Center, a three-tower office complex in Atlanta's prestigious Buckhead
community with over 885,000 square feet of rentable office space and a nine-
level parking structure. The complex is currently 98% leased to a variety of
tenants. Indebtedness of this property is a $79.9 million, 10-year, non-
recourse loan with New York Life which was approximately $78.9 million as of
December 31, 1997.
In December 1996, OPCC, through a subsidiary, acquired 333 West Wacker
Drive situated in the heart of Chicago's West Loop. This 36-story tower with
826,632 square feet is a defining feature of the Chicago skyline and is
currently 91% leased. It was acquired for cash and in 1997 was refinanced with
a $65.0 million, 15-year, non-recourse loan from The Prudential Insurance
Company of America which was approximately $64.8 million as of December 31,
1997.
Also in December 1996, OPCC purchased a two-thirds partnership interest
in a regional retail and office complex, Copley Place, located in the Back Bay
area of Boston. The four seven-story towers have 368,894 square feet of retail
space beneath four office towers with a total of 842,460 square feet and two
parking garages. The retail and office space are currently 99% and 97%
occupied. The property was acquired with a non-recourse mortgage indebtedness
to Aetna Casualty and Surety Company in the amount of $210 million as of
December 31, 1996, including accrued but deferred interest. OPCC refinanced the
property in 1997 with a $195.0 million, 10-year, non-recourse loan from
Metropolitan Life Insurance Company which was approximately $194.4 million as of
December 31, 1997.
In January 1997, OPCC established its own real estate property management
company, Overseas Management, Inc. ("OMI"). With its own employees and third-
party service providers, OMI provides on-site management and leasing of all of
OPCC's office and retail properties.
Revenues for the real estate and leasing business (which includes the
hotel) constituted 21.9%, 17.8% and 17.0% of OPL's consolidated revenues in
1997, 1996 and 1995, respectively. Information regarding real estate and leasing
operating income for the years ended 1997, 1996 and 1995 is set forth in
Overseas' Statements of Consolidated Income and in Note 9 to the Notes to the
Consolidated Financial Statements included in "Item 8 - Financial Statements and
Supplementary Data".
8
<PAGE>
Real Estate and Leasing Industry
- --------------------------------
The commercial real estate industry offers an interested purchaser a wide
array of opportunities depending on the location and type of property they are
interested in. OPCC's credit standing and today's attractive interest rates
permit OPCC to approach numerous sources for competitive financing. As with
many industries affected by market trends, depending on market conditions and
the property type OPCC chooses to acquire or dispose of, OPCC may become subject
to strong competition when demonstrating an interest in a property or risk
devaluation of real estate held if the market takes a sudden turn downward. In
consideration of the foregoing, OPCC, through its professional staff and
outside consultants, monitors the real estate market closely to ensure that all
acquisitions continue to meet OPCC's investment criteria.
The leasing industry offers users an alternative to the purchase of
nearly every type of property and equipment, with varying payment conditions,
depending on the type of property and the nature of the user. Depending upon
the extent and segment of the leasing market OPCC determines to enter, OPCC may
become subject to intense competition. Manufacturers and other leasing
companies may provide certain ancillary services which OPCC cannot offer or may
offer lease terms which OPCC is unwilling to offer. In addition, in the
aircraft leasing industry, there are numerous other entities which lease
aircraft, including distributors, manufacturers, airlines, equipment managers,
leasing companies, financial institutions and public and private limited
partnerships, some of which have greater financial resources and more experience
than OPCC. Demand for leasing also depends upon the availability of and terms
by which the acquisition of property can be financed through other means.
Regulation
- ----------
The Federal Aviation Administration ("FAA") regulates air transportation
services, but does not directly regulate the leasing business of OPCC. The
FAA's authority relates primarily to safety aspects of air transportation,
including aircraft standards and maintenance, personnel and ground facilities.
Thus, in connection with OPCC's aircraft leases, the FAA regulates the lessee of
the aircraft but not the lease itself. Similarly, where maintenance is provided
under a contract, the maintenance provider must be certified by the FAA. All
aircraft leased by OPCC are leased to a certified air carrier.
9
<PAGE>
INVESTMENTS AND INVESTMENT POLICY
- ---------------------------------
OPL's investment policies are designed to achieve high levels of total
return while maintaining liquidity and preserving principal. OPL primarily
invests in highly liquid debt securities of investment grade standard such as
governments, government agencies, financial institutions and utilities in its
fixed income portfolio and in stocks drawn mainly from within the S&P 500 Index
for its equity portfolio as determined by one or more recognized ratings
agencies or by our investment managers. OPL's investments are managed by
unaffiliated investment managers based in London as follows: Deutsche Morgan
Grenfell International Funds Management Ltd., Barclays Global Investors Plc,
BankAmerica Trust Company (Jersey) Ltd., HSBC Asset Management Bahamas Ltd.,
State Street Global Advisors U.K. Ltd. and AON Advisors (U.K.) Ltd.
OPL has standardized investment management agreements an example of which
is attached as Exhibit 10(ee). All managed portfolios are held in custody by
State Street Trust Company Canada.
OPL's investment portfolio as of December 31, 1997, consisted of the
following (000s omitted):
<TABLE>
<CAPTION>
AMOUNT SHOWN IN
COST VALUE BALANCE
SHEET
---------------------------------------------------------
<S> <C> <C> <C>
Fixed Maturities:
Bonds
U.S. Government and government agencies
and authorities (including Treasury notes) $ 371,044 $ 403,544 $ 371,533
Foreign governments 314,361 310,374 310,374
All other corporate bonds 18,539 19,176 19,176
---------------------------------------------------------
TOTAL FIXED MATURITIES $ 703,944 $ 733,094 $ 701,083
---------------------------------------------------------
EQUITY SECURITIES
Common Stocks
Public utilities $ 63,769 $ 80,466 $ 80,466
Banks, trust and insurance companies 76,934 102,488 102,488
Industrial, miscellaneous and all other 741,475 916,280 916,280
---------------------------------------------------------
TOTAL EQUITY SECURITIES $ 882,178 $1,099,234 $1,099,234
---------------------------------------------------------
---------------------------------------------------------
SHORT TERM INVESTMENTS $ 20,854 $ 21,520 $ 21,520
---------------------------------------------------------
---------------------------------------------------------
TOTAL INVESTMENTS $1,606,976 $1,853,848 $1,821,837
---------------------------------------------------------
</TABLE>
All investments, except for certain U.S. Treasury notes, are recorded at
fair value with any change in unrealized gains and losses included in net
income. Certain U.S. Treasury Notes classified as held-to-maturity securities
are carried at amortized cost, as OPL has the ability and intent to hold them to
maturity.
10
<PAGE>
Effective December 31, 1995, Overseas adopted FASB's Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities and reclassified its available-for-sale securities as
trading securities. Trading securities are carried at fair value. Available-
for-sale securities were carried at fair value, with unrealized gains and
losses, net of applicable income taxes, excluded from net income and reported as
a separate component of members' equity.
For a further discussion of investment results, see "Item 7 --
Management's Discussion and Analysis of Financial Conditions and Results of
Operations," and Note 3 in Notes to the Consolidated Financial Statements
included in "Item 8 -- Financial Statements and Supplementary Data."
11
<PAGE>
TAXATION
- --------
OPL is incorporated under the laws of the Islands of Bermuda and does
not consider itself to be engaged in a trade or business in the United States
and, therefore, does not expect to be subject to U.S. income taxes. Certain of
OPL's subsidiaries engage in business in the United States, primarily OPCC, and
as a result it, but not OPL, is subject to U.S. income taxes. Under current
Bermuda law, OPL is not obligated to pay any tax in Bermuda based upon income or
capital gains.
The United States Internal Revenue Service ("IRS") has issued a Notice
of Deficiency with respect to the Company's 1984 taxable year in which it
asserted that the Company is subject to U.S. tax in the amount of $53 million
for the year 1984, plus penalties and interest for that year. On August 18,
1995, the Company filed a Petition in the United States Tax Court contesting the
proposed assessment of tax in the Notice of Deficiency. A trial was held before
the United States Tax Court in two sessions during the fall of 1997, the second
of which ended on November 7, 1997. An additional trial session previously
scheduled for the week of December 8, 1997 was cancelled by agreement of the
Company and the IRS. The Company filed its trial brief on February 13, 1998. The
IRS indicated on February 13, 1998, that it no longer intends to pursue its
position against the Company for 1984. However, it is unclear as to the impact,
if any, the IRS's position with respect to 1984 would have on subsequent years.
The IRS has also asserted that OPL is subject to U.S. taxation for its 1985
through 1987 taxable years and has proposed an aggregate assessment of $240
million of tax, plus penalties and interest, for those years. The Company has
filed a Protest against the proposed assessment with the Appellate Division of
the IRS with respect to the years 1985 through 1987. The IRS has further
asserted that OPL is subject to U.S. taxation for the years 1988 through 1990
and has proposed an aggregate assessment of $170 million of tax, plus penalties
and interest, for those years. The Company has filed a Protest against the
proposed assessment with the Appellate Division of the IRS with respect to the
years 1988 through 1990. The IRS has not proposed an assessment for years
subsequent to 1990. However, the IRS may take similar positions for subsequent
years pending resolution of the years currently in dispute. OPL believes that it
has no tax liability, that it is not subject to U.S. taxation, and that there is
substantial authority for its position. It has vigorously contested the Notice
of Deficiency for 1984 and will vigorously contest proposed assessments for the
years 1985 through 1990 and any future assessments.
OPL and its subsidiaries, other than OPCC and its subsidiaries,
conduct, and intend to conduct their activities so that they will not do
business in the United States or otherwise cause any portion of their
undistributed earnings and profits to be subject to United States federal and
state taxation of income under present law. If OPL were, nevertheless,
determined to be engaged in business in the United States, it would be subject
to United States corporate taxes on income considered to be derived from that
portion of its trade or business deemed to be conducted in the United States.
Various provisions of the Internal Revenue Code of 1986 (the "Code")
provide for current taxation at the shareholder level of certain kinds of income
earned by foreign enterprises owned in whole or part by United States residents.
Among such provisions are those in Subpart F of the Code, concerned with
"controlled foreign corporations," and those concerned with "passive foreign
investment companies." If OPL were to be subject to one or more of these
provisions, some or all, depending upon the applicable provisions, of the United
States shareowners of OPL would be liable for federal income taxes with respect
to certain of the earnings of OPL, whether or not an amount equal to such
earnings was distributed to such shareowners as a dividend. Such liability is
referred to herein as "current taxation."
12
<PAGE>
Under Subpart F of the Code, the United States shareowners of OPL
would be subject to current taxation on income of OPL derived from insuring or
reinsuring the risks of its United States shareowners and persons related
thereto, but only if (i) such insured or reinsured United States shareowners and
related persons were to own at least 20% of the common stock of OPL and (ii)
such income from the insurance or reinsurance of the risks of its United States
shareowners and related persons were to represent at least 20% of OPL's
reinsurance income. The reinsurance underwritten by OPL does not now exceed
these limits and management does not expect that these limits will be exceeded
in the future. Furthermore, any United States person owning directly or
indirectly 10% of the common stock of OPL (a "United States 10% Shareholder")
would be subject to current taxation on their proportionate share of the Subpart
F insurance income of OPL if United States 10% Shareholders were to own, in the
aggregate, more than 25% of the common stock of OPL. Finally, a United States
10% Shareholder would be subject to current taxation on his proportionate share
of all Subpart F income of OPL, and of certain other items, if United States 10%
Shareholders were to own, in the aggregate, more than 50% of the common stock of
OPL. OPL does not believe that any OPL shareholder is currently subject to any
of the tax provisions described in this paragraph.
Under the passive foreign investment company rules, all United States
shareowners of OPL would be subject to rules designed to approximate current
taxation of the earnings of OPL if at least 75% of the gross income of OPL were
"passive income", or if at least 50% by value of the average assets of OPL were
to produce, or were held for the production of, "passive income". Except as may
be provided in future regulations promulgated by the Secretary of the Treasury,
income derived by OPL in the active conduct of its reinsurance business does not
constitute "passive income", and assets held by OPL that produce solely or are
held solely for the production of such income do not constitute "passive
assets". Further, under the Subsidiary Look-Through Rules, because OPL owns 100%
of the stock of OPCC, OPL is treated as if it held the assets of OPCC and
received directly the income of OPCC earned from those assets. Consistent with
OPL's income from its reinsurance business, however, the income derived by OPCC
in the active conduct of its real estate, leasing and hotel business does not
constitute "passive income", and assets held by OPCC that produce solely or are
held solely for the production of such income do not constitute "passive
assets".
It should be noted that Congress has historically sought to broaden
the taxation of foreign enterprises owned by United States residents, and future
legislation could affect the United States federal tax treatment of OPL and its
shareowners.
There is imposed on foreign insurers a United States federal excise
tax on the reinsurance of United States risks equal to 1% of the reinsurance
premiums, payable by the United States company ceding the reinsurance. Under
OPL's reinsurance agreements, OPL reimburses the ceding company for such tax, as
well as for premium taxes payable under state law, if any.
Bermuda does not have a corporate income tax or a tax on insurance
premiums.
13
<PAGE>
EMPLOYEES
- ---------
Overseas, directly and through its subsidiaries, has 65 employees, 20
in Bermuda, 12 in Atlanta, 26 in St. Louis and 7 in its OMI offices.
The Company purchases administrative and other services from a number
of suppliers both in the United States and Bermuda. The individuals who provide
these outsourced services are not included as employees.
See "Item 10 - Directors and Executive Officers of the Registrant"
below.
14
<PAGE>
Item 2. Properties
- ------- ----------
The Marriott Copley Place Hotel (the "Hotel") is a 38-story full-
service, luxury, convention hotel located in the prominent Back Bay section of
Boston, Massachusetts. The Hotel has 1,139 guest rooms, 44,000 square feet of
meeting and convention facilities (including the largest hotel exhibit hall in
Boston), three restaurants, a gift shop and concierge level and a parking garage
that can accommodate 265 automobiles.
The KMart Facility consists of an approximately 1.5 million square
foot warehouse building, including parking areas and drives, located on
approximately 113 acres of land in Manteno, Illinois. In addition, OPCC also
owns a 50% interest in 493 Hopper Cars. This rolling stock is leased to Bessemer
& Lake Erie Railroad Company and is used to transport a wide variety of
commodities, primarily coal.
Sitting on 39 acres in Mahwah, New Jersey, OPCC owns and maintains a
435,000 square foot facility which has been leased to UPS through 2019. This
facility, known as Ramapo Ridge, is being used by a UPS subsidiary as a data
processing, telecommunications and operations facility. The entire facility
consists of an office building, computer center, a central service structure and
a parking garage with an area of approximately 562,000 square feet. UPS has an
option to purchase the Ramapo Ridge Facility at the end of the lease term. It
also has an option to purchase the land, but not the buildings, from OPCC in
2050. In 1996, OPCC completed construction of a 27,000 square foot addition to
the Ramapo Ridge Facility which accommodates future expansions of up to 54,000
square feet. See "Item 13 -- Certain Relationships and Related Transactions".
OPCC owns five Boeing 757 aircraft which have been leased to UPS for a
term ending in 2012. See "Item 13 -- Certain Relationships and Related
Transactions".
OPCC purchased One Buckhead Plaza ("OBP") in November 1995. OBP is a
20-story office and specialty retail tower located in the heart of Buckhead, a
prestigious business and residential community of Atlanta, Georgia. The building
has 400,000 square feet of rentable office space, 40,000 square feet of rentable
retail space, 1,229 parking spaces and 14,000 square feet of storage. It is
approximately 91% leased.
OPCC acquired the Atlanta Financial Center on August 30, 1996. The
complex is currently 98% leased to a variety of high quality firms. Some of
Atlanta's prominent retail and hotel facilities are within easy walking distance
and easy access to primary roadways is nearby. This office building has over
885,000 square feet of rentable office space and includes a nine level parking
structure.
In December 1996, OPCC acquired 333 West Wacker Drive situated in the
heart of Chicago's West Loop in the downtown market. This 36-story tower with
826,632 square feet is a defining feature of the Chicago skyline. The property
is currently 91% leased and is occupied by a nationally known multitenants.
Also in December 1996, OPCC purchased a two-thirds partnership
interest in a regional retail and office complex, Copley Place, located in the
Back Bay area of Boston, Massachusetts. The four seven-story towers , adjacent
to the Marriott Hotel have 368,894 square feet of retail space developed beneath
four office towers with a total of 842,460 square feet and two parking garages.
The retail and office space are currently 99% and 97% occupied. The space is
occupied by strong creditworthy tenants and retailers.
15
<PAGE>
The Boeing 757 aircraft and the related lease are subject to a
security interest, the Ramapo Ridge Facility, the related lease , certain
buildings and the Hotel are subject to mortgages. See "Item 1 -- Business --
Real Estate and Leasing Activities".
Item 3. Legal Proceedings
- ------- -----------------
OPL was subject to a tax audit by the United States Internal Revenue
Service for the years 1984 through 1990. Information regarding the tax audit is
incorporated herein by reference from Note 2 of the Notes to Consolidated
Financial Statements. See "Item 8 -- Financial Statements and Supplementing
Data" below. See also "Item 1 -- Taxation".
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1997.
16
<PAGE>
PART II
-------
Item 5. Market for the Registrant's
- -------
Common Equity and Related Stockholder Matters
---------------------------------------------
(a) OPL Common Stock
----------------
OPL is authorized to issue 900,000,000 shares of Capital Stock, $.10
par value per share ("Common Stock"), of which 131,000,000 were issued and
outstanding as of February 28, 1998. It is also authorized to issue 200,000,000
shares of Preference Stock, $.10 par value per share. At present no shares of
Preference Stock have been issued or are outstanding nor are there any plans to
issue any such shares.
Each share of Common Stock is entitled to one vote in the election of
directors and other matters except that any "Substantial Shareholder", as
defined in OPL's Bye-Laws, is entitled to only one one-hundredth of a vote with
respect to each share held by such shareholder which is in excess of 10 percent
of OPL's outstanding voting stock. The term Substantial Shareholder is defined
to mean any shareholder, other than UPS or any employee benefit plan of OPL or
UPS, who is the beneficial owner of more than 10 percent of the voting power of
the outstanding shares of OPL entitled to vote generally in the election of
directors. There are no limitations imposed by foreign law, or by OPL's
Memorandum of Association and Bye-Laws, or by any agreement or other instrument
to which OPL is a party or to which it is subject, on the right of shareowners,
solely by reason of their citizenship or domicile, to vote Common Stock. Owners
of Common Stock are entitled to receive ratably such dividends as are declared
by the Board of Directors. Upon liquidation, OPL's shareowners are entitled to
share on a pro rata basis in the assets of OPL legally available for
distribution to shareowners.
(b) Market for OPL's Common Stock
-----------------------------
OPL's Common Stock is not listed on a securities exchange and is not
sold in the organized over-the-counter markets. Prior to August 7, 1996, UPS was
the principal purchaser of shares of Common Stock. Common Stock purchased by UPS
was used primarily for awards to employees under its stock-based employee
compensation plans and purchases by its employees or has been sold to OPL and
constructively retired. Since August 7, 1996, OPL has assumed responsibility for
stock purchases under the Company's Bye-Laws.
OPL's Bye-Laws provide that no outstanding shares of Common Stock may
be transferred, except by a bona fide gift or inheritance, unless such shares
shall have first been offered, by written notice, for sale to OPL at the lower
of their book value or the price at which they are to be offered to the proposed
transferee and on the same terms upon which they are to be offered to the
proposed transferee. Notices of proposed transfers must be sent to the Treasurer
of OPL, must set forth the number of shares proposed to be sold, the proposed
price per share, the name and address of the proposed transferee, the terms of
the proposed sale and must contain a statement by the proposed transferee that
the information contained in the notice is true and correct. OPL has the option,
within 30 days after receipt of the notice, to purchase all or a portion of the
shares. If OPL chooses to exercise its right of first refusal with respect to
only a portion of the shares designated for sale, the shareowner may sell the
remaining portion of such shares for the price and on the terms described in the
notice. If OPL fails to exercise or waives the option, the shareowner may,
within a period of 20 days thereafter, sell to the proposed transferee all, but
not part, of the shares which were previously offered to OPL, and not purchased
by it pursuant to its option, for the price and on the terms described in the
notice.
17
<PAGE>
All transferees of shares hold their shares subject to the same
restrictions. Shares previously offered to OPL but not transferred within the
20 day period remain subject to the initial restrictions. Shares of Common
Stock may be pledged but they may not be transferred upon foreclosure unless
they have first been offered to OPL in the manner described above.
OPL also has the right under its Bye-Laws to purchase shares of Common
Stock distributed as incentive awards (including awards under the UPS Managers
Incentive Plan and shares distributed pursuant to certain UPS Stock Option
Plans) to employees of UPS and its subsidiaries following the recipient's
retirement, death or other termination of employment. OPL may exercise this
right to purchase all or a portion of such shares of a former employee at any
time within a period of three years following such termination (if the
shareowner owns less than 500 shares of UPS's common stock) or thirteen years
(if the shareowner owns 500 or more shares of UPS's common stock). The purchase
price will be the book value of the shares at the time of purchase as described
below. Any transferee of shares of Common Stock owned by recipients of
incentive awards of OPL shares will hold the shares subject to this right of
purchase by OPL.
OPL also has a right to repurchase shares of Common Stock sold by UPS
prior to August 7, 1996, in a continuing offering of UPS and OPL's shares, which
commenced in June of 1986. This repurchase right, which is contained in the
Subscription Agreement executed by each purchaser in that offering, is similar
to the right which OPL has to repurchase shares distributed as incentive awards.
Under OPL's Bye-Laws, OPL has the right to purchase shares of Common
Stock which may be issued as stock dividends, or in stock splits,
recapitalizations or reorganizations of OPL similar to the rights that it has to
purchase the shares on which the dividend, split, recapitalization or
reorganization shares were issued. OPL also has the right to purchase Common
Stock in a number of other circumstances under OPL's Bye-Laws.
Although UPS and OPL, each individually, has indicated that they
intend to continue their policies of awarding shares of Common Stock, there can
be no assurance of the continuation of that policy. The feasibility of purchases
is subject to continued maintenance by UPS and OPL, each individually, of
satisfactory earnings and financial condition and UPS's need for OPL shares for
awards under its compensation plans.
For the purposes of fixing the price at which OPL will purchase shares
of Common Stock upon exercise of its rights described above, book value per
share is determined from OPL's audited balance sheet as reported in its most
recently published Annual Report to Shareowners and mailed to its shareowners or
otherwise generally made available. Book value per share since January 9, 1995
has been as follows:
<TABLE>
<CAPTION>
Date Price
-------- ------
<S> <C>
January 9, 1995 to January 8, 1996 $ 9.88
January 9, 1996 to January 8, 1997 $12.00
January 9, 1997 to January 7, 1998 $14.24
</TABLE>
On January 8, 1998, OPL announced that according to OPL's most recent
audited balance sheet, book value per share was $17.00. Under the Bye-Laws, OPL
has the rights to purchase its shares at $17.00 per share.
18
<PAGE>
As of December 31, 1993, UPS held 1,519,775 shares of Common Stock.
From January 1 to January 10, 1994, UPS purchased 5,355 shares of Common Stock
at a price of $7.40 per share. From January 11 to February 28, 1994, UPS
purchased 5,768,631 shares of Common Stock and sold 362,081 shares to eligible
employees pursuant to its continuous offering of UPS and OPL shares at a price
of $8.80 per share. UPS distributed 1,604,901 shares pursuant to the Managers
Incentive Plan in February 1994. Effective February 11, 1994, OPL purchased four
million shares from UPS at $8.80 per share and constructively retired them.
From March 1, 1994 to January 9, 1995, UPS purchased 1,077,260 shares
of Common Stock and sold 1,286,963 shares to eligible employees pursuant to its
continuous offering of UPS and OPL shares at a price of $8.80 per share. From
January 10, 1995 to February 28, 1995, UPS purchased 4,826,482 shares of Common
Stock at a price of $9.88 per share and sold 199,084 shares to eligible
employees pursuant to its continuous offering of UPS and OPL shares. In February
1995 UPS distributed 1,645,602 shares pursuant to awards under the Managers
Incentive Plan. On February 17, 1995, OPL purchased from UPS three million
shares of Common Stock at $9.88 per share and constructively retired them. As of
February 28, 1995, UPS held 1,098,872 shares of Common Stock.
From March 1, 1995 to January 8, 1996, UPS purchased 1,282,427 shares
of Common Stock at a price of $9.88 per share and sold 2,083,492 shares to
eligible employees pursuant to its continuous offering of UPS and Overseas
shares. Between January 9, 1996 and February 29, 1996 UPS purchased 5,970,983
shares of Common Stock at a price of $12.00 per share and sold 340,497 shares to
eligible employees pursuant to its continuous offering of UPS and Overseas
shares. In January 1996, UPS distributed 1,594,762 shares pursuant to awards
under the Managers Incentive Plan. As of February 29, 1996, UPS held 4,333,531
shares of Common Stock.
From March 1, 1996 to August 7, 1996, UPS purchased 814,034 shares of
Common Stock at a price of $12.00 per share and sold 3,408,147 shares to
eligible employees pursuant to its continuous offering of UPS and Overseas
shares. On September 26,1996, OPL purchased from UPS one million shares of
Common Stock at $12.00 per share and constructively retired them. Between
January 9, 1997 and February 28, 1997 UPS sold 279,639 shares of Common Stock at
a price of $14.24 per share. As of February 28, 1997, UPS held 459,779 shares of
Common Stock.
Since August 7, 1996 , OPL has assumed responsibility for stock
purchases under the Company's Bye-Laws. From August 7, 1996 to January 8, 1997,
OPL purchased 587,178 shares of Common Stock at a price of $12.00 per share.
From January 9, 1997 to February 28, 1997, OPL purchased 5,520,015 shares of
Common Stock at a price of $14.24 per share and sold 1,583,792 shares pursuant
to awards under the UPS Managers Incentive Plan. As of February 28, 1997, OPL
held 4,523,401 shares of Common Stock in Treasury.
From March 1, 1997 to March 26, 1997, UPS sold 30,540 shares of Common
Stock to eligible employees pursuant to its continuous offering of UPS and OPL
shares at a price of $14.24 per share. On March 26, 1997, OPL purchased 429,239
shares of Common Stock from UPS. Effective March 26, 1997, UPS was no longer a
holder of OPL shares.
19
<PAGE>
From March 1, 1997 to January 7, 1998, OPL purchased 2,170,107 shares
of Common Stock at $14.24 per share. From March 27, 1997, to January 7, 1998 OPL
sold 1,425,977 shares to eligible employees pursuant to its continuous offering
of UPS and OPL shares at a price of $14.24 per share. Between January 8, 1998
and February 28, 1998, OPL purchased 5,429,007 shares of Common Stock, sold
374,722 shares pursuant to its continuous offering of UPS and OPL shares and
sold 1,177,143 shares pursuant to awards under the UPS Managers Incentive Plan,
all at a price of $17.00 per share. As of February 28, 1998, OPL held 5,573,912
shares of Common Stock in Treasury.
In 1997, OPL purchased four million shares at $14.24 and
constructively retired them - three million shares on March 7, 1997 and one
million shares on August 18, 1997.
There were approximately 84,000 holders of Common Stock as of February
28, 1998.
(c) Dividend Policy
---------------
Declarations of dividends are at the discretion of the Board of
Directors in light of all relevant facts, including general business conditions
and OPL's earnings and capital requirements. It is the intent of the Board to
consider the payment of an annual dividend in an amount to be determined on the
basis of OPL's earnings, financial condition and capital needs. OPL declared and
paid cash dividends in 1997, 1996 and 1995 of $0.90, $0.72 and $0.60 per share,
respectively.
Dividends paid by OPL on shares of Common Stock to persons residing in
the United States will be subject to United States federal income taxes to the
same extent that such dividends would be taxable to such persons if paid by a
domestic corporation, but without the dividend received deduction available to
corporations. Similar treatment is likely to be accorded under applicable state
law.
There are no applicable tax treaties or Bermuda laws, decrees or
regulations which would impact on payment or remittance of dividends, require
withholding for tax purposes or restrict the export or import of capital.
(d) Custody Arrangements For Certificates
-------------------------------------
For Common Stock
----------------
Each shareowner may elect to have First Union National Bank ("First
Union") hold his or her certificates as custodian without cost to the
shareowner.
If the shareowner elects to have First Union hold the shares of Common
Stock in custody, First Union will have the shares registered in its name and
will sell or otherwise dispose of the shares only upon the shareowner's
instruction and in conformity with OPL's Bye-Laws. Dividends and other
distributions on Common Stock held in custody will be promptly remitted by First
Union to the shareowner. Shareowners will receive periodic statements of the
number of shares held by First Union for their account and of dividends paid on
those shares. Notice of any regular or special meeting of shareowners of OPL
will be forwarded to shareowners by First Union, which will vote the shares as
directed by the shareowner or, on request, furnish the shareowner with a proxy
thus permitting the shareowner to vote the number of shares of Common Stock held
for him or her at the meeting.
20
<PAGE>
Item 6. Selected Financial Data
- ------- -----------------------
The following selected financial information should be read in
conjunction with Overseas' consolidated financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" which
follow this section. All currency amounts herein are expressed in U.S. dollars.
Five-Year Selected Financial Data
(in thousands, except per share amounts)
Income Statement Data:
- ---------------------
Years Ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Reinsurance:
Premiums written $ 720,084 $ 560,561 $ 500,652 $ 449,577 $ 347,906
Premiums earned $ 639,071 $ 531,088 $ 463,910 $ 432,323 $ 345,770
Underwriting income $ 225,307 $ 237,854 $ 233,657 $ 220,678 $ 173,363
Real Estate and Leasing:
Revenue $ 247,940 $ 150,741 $ 125,450 $ 121,758 $ 49,686
Operating income $ 25,210 $ 12,060 $ 6,579 $ 13,438 $ 9,601
Investments:
Interest income $ 53,367 $ 55,538 $ 87,361 $ 43,731 $ 52,921
Net holding gain on trading
securities $ 187,139 $ 91,758 $ 48,636 -- --
Net gain (loss) of investments
available-for-sale -- -- $ 8,520 $ (54,269) $ 26,813
Investment income (loss) $ 243,408 $ 162,113 $ 148,372 $ (7,210) $ 81,908
Net Income $ 477,115 $ 401,225 $ 370,799 $ 222,444 $ 260,658
Net Income Per Share $ 3.64 $ 2.97 $ 2.73 $ 1.60 $ 1.82
Cash Dividends Per Share $ .90 $ .72 $ .60 $ .48 $ .45
Balance Sheet Data:
- ------------------
December 31,
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash and Investments $2,176,893 $1,873,028 $1,650,291 $1,388,697 $1,166,423
Total Assets:
Reinsurance $2,302,054 $1,864,360 $1,699,035 $1,417,013 $1,331,892
Real estate and leasing $1,365,615 $1,327,809 $ 720,276 $ 668,877 $ 600,584
---------- ---------- ---------- ---------- ----------
$3,667,669 $3,192,169 $2,419,311 $2,085,890 $1,932,476
---------- ---------- ---------- ---------- ----------
Debt $ 758,416 $ 713,790 $ 436,674 $ 402,943 $ 385,077
---------- ---------- ---------- ---------- ----------
Members' Equity $2,227,162 $1,922,797 $1,631,492 $1,373,931 $1,257,765
Book Value Per Share $17.00 $14.24 $12.00 $9.88 $8.80
</TABLE>
21
<PAGE>
Item 7 Management's Discussion and Analysis of
- ------ ---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
1997 Compared to 1996
- ---------------------
Reinsurance:
Reinsurance premiums written increased to $720.1 million in the year ended
December 31, 1997, from $560.6 million in 1996. The increase of $159.5 million
was primarily due to an increase in property premiums of $108.3 million, an
increase in workers' compensation premiums of $37.6 million and an increase in
automobile reinsurance premiums of $13.9 million. These increases were offset by
a decrease of $14.8 million in shipper's risk premiums due to the 15-day strike
against UPS in August 1997 and a decrease of $41.8 million from reinsurance
programs which were discontinued and are currently in run-off. Two new lines of
business introduced in 1997 contributed $42.7 million to reinsurance premiums
written - aviation and marine programs amounted to $37.7 million and medical
benefits totalled $5.0 million. The significant increase in property premiums
can be attributed primarily to the writing of eight new property programs which
provided $98.7 million in premiums written. Workers' compensation increased as
a result of a policy period including eight months in 1996 compared to 12 months
in 1997. Net underwriting income decreased by $12.5 million over last year
since the increases in underwriting income from other reinsurance programs were
not sufficient to completely offset the decreased underwriting income from
excess value reinsurance.
Real Estate and Leasing:
Real estate and leasing revenue increased by $97.2 million over 1996. Office
buildings purchased in August and December 1996 generated rents of $97.3 million
for 1997 compared to $6.6 million in 1996. Hotel sales increased $5.2 million
due to higher room rates and slightly higher occupancy rates. Operating lease
rents with UPS decreased $1.1 million due to a reduction in the toll structure
as well as a decrease in operating activity at one of the facilities. Operating
expenses increased due to increased operating costs for new buildings and
increased hotel operating expenses. Real estate and leasing operating income
increased from $12.1 million to $25.2 million in 1997.
Investment Income:
The investment results for the year ended December 31, 1997 reflect the advances
in the U.S. equity market. Investment income increased by $81.3 million over
1996 primarily due to increased net holding gains on investments of $95.4
million offset by decreased dividends on real estate investments trust
securities and equity securities of $12.2 million and a decline in interest
income of $2.1 million. Net holding gains on the equity portfolio increased
$73.0 million while holding gains in the fixed income portfolio increased $22.4
million. Interest from debt securities declined $2.1 million, primarily due to
a lower allocation of investment in fixed income securities of 51% in 1997
compared to 53% during 1996.
Net Income:
Net income increased by $75.9 million over 1996 due to the performance of our
investment portfolio. The effects of the decreased excess value reinsurance
premiums and underwriting income from the 15-day strike against UPS in August
1997, were offset by improvements in other reinsurance underwriting income and
real estate and leasing income. Net income per share was $3.64, a 67 cent per
share increase over 1996.
22
<PAGE>
1996 Compared to 1995
- ---------------------
Reinsurance:
Reinsurance premiums written increased to $560.6 million in the year ended
December 31, 1996, from $500.7 million in 1995. The increase of $59.9 million
was due to growth in excess value premiums of $21.5 million, decreased workers'
compensation reinsurance premiums written of $19.1 million and an increase in
other reinsurance premiums written of $57.5 million. Excess value reinsurance
premiums increased due to a 6% increase in excess value units over 1995.
Workers' compensation reinsurance premiums written decreased $19.1 million due
to a change in the program's coverage period and renewal date from May 1, 1997
to December 31, 1996. The increase in other reinsurance premiums written was
primarily the result of four new treaties which contributed $68.4 million in
premiums written in 1996, and increased premiums of $11.3 million on the renewal
of existing programs. This premium increase was offset by reduced premiums of
$22.2 million from four reinsurance programs which were discontinued and are
currently in run-off. The increase in reinsurance underwriting income of $4.2
million is primarily due to excess value reinsurance.
Real Estate and Leasing:
Real estate and leasing revenue increased by $25.3 million over 1995. OPCC
purchased office buildings in November 1995 and August 1996, which generated
rents of $17.1 million for 1996 compared to $1.7 million in 1995. The two
properties acquired in December 1996 did not contribute to revenues in 1996.
Hotel sales increased $7.2 million due to higher occupancy and higher room
rates. Operating lease rents with UPS increased $2.9 million due to increased
rents resulting from the expansion of the data processing facility. Operating
expenses increased due to increased hotel operating expenses, increased costs at
the data processing facility due to its expansion and increased operating costs
for new buildings. Real estate and leasing operating income increased from $6.6
million to $12.1 million in 1996.
Investment Income:
The investment results for the year ended December 31, 1996, reflect the effects
of the diversification steps taken in November 1995 and the reclassification of
our investments as trading securities with the corresponding reporting of
unrealized gains and losses as income instead of as a separate component of
Members' Equity. Investment income increased by $13.7 million over 1995
primarily due to increased net holding gains on investments of $34.6 million,
increased dividends on real estate investment trust securities and equity
securities of $12.1 million offset by a decline in interest income of $31.8
million. Net holding gains on the equity portfolio increased $78.3 million and
were partially offset by increased holding losses in the fixed income portfolio
of $43.7 million due to declines in carrying values resulting from increases in
interest rates during the year. Interest from debt securities declined $31.8
million, primarily due to a lower allocation of investments in fixed income
securities of 53% in 1996 instead of almost 100% during 1995.
Net Income:
Net income increased by $30.4 million over 1995 due to improved earnings in all
segments, with the greatest improvement reported in our investment activities.
Net income per share was $2.97, a 24 cent per share increase over 1995.
23
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Overseas believes that its investments and cash flow from operations
are adequate sources of capital and liquidity for the payment of claims and the
conduct of its existing real estate and leasing operations. Overseas further
believes that its strong capital position will permit continued expansion of its
reinsurance business should appropriate opportunities arise. In the event
Overseas decides to purchase additional capital assets, it may, as demonstrated
by its existing portfolio of assets, finance such purchases from internally
generated funds or by outside borrowing which Overseas believes would be readily
available to it.
Overseas' investment policies are designed to achieve enhanced returns
to shareowners measured over conventional medium to long-term market cycle
periods. Overseas primarily invests in highly liquid debt securities of
governments, government agencies, financial institutions and utilities in its
fixed income portfolio and in stocks drawn mainly from the S&P 500 Index for its
equity portfolio. Increases in interest rates could have a negative effect on
the value of the bonds and equities comprised within its investment portfolio.
However, Overseas expects that an increase in interest rates will have no
material adverse effect on overall liquidity.
Because the liquidity of Overseas' investments permits Overseas to
respond quickly to changing market conditions, Overseas' investments are not
significantly affected by inflation. Inflation, including inflation in damage
awards and costs, can substantially increase the ultimate cost of settlement in
certain types of insurance. This is because the actual payment of claims may
take place a number of years after the provisions for losses are reflected in
the financial statements. Overseas will, on the other hand, earn income on the
funds retained for a period of time until eventual payment of a claim.
In accordance with normal business practice, letters of credit in
favor of certain insurance companies reinsured by OPL and OP Re are established
and amended periodically based upon the insurance companies' actual loss
experience.
In connection with the acquisition of real estate assets and leased
assets, Overseas Partners Capital Corp. (OPCC) has issued or assumed certain
debt obligations. For further information, see Notes to Consolidated Financial
Statements included in "Item 8 -- Financial Statements and Supplementary Data".
OPCC continues to actively seek additional investment opportunities.
24
<PAGE>
The United States Internal Revenue Service ("IRS") has issued a Notice
of Deficiency with respect to the Company's 1984 taxable year in which it
asserted that the Company is subject to U.S. tax in the amount of $53 million
for the year 1984, plus penalties and interest for that year. On August 18,
1995, the Company filed a Petition in the United States Tax Court contesting the
proposed assessment of tax in the Notice of Deficiency. A trial was held before
the United States Tax Court in two sessions during the fall of 1997, the second
of which ended on November 7, 1997. An additional trial session previously
scheduled for the week of December 8, 1997 was cancelled by agreement of the
Company and the IRS. The Company filed its trial brief on February 13, 1998. The
IRS indicated on February 13, 1998 that it no longer intends to pursue its
position against the Company for 1984. However, it is unclear as to the impact,
if any, the IRS's position with respect to 1984 would have on subsequent years.
The IRS has also asserted that OPL is subject to U.S. taxation for its 1985
through 1987 taxable years and has proposed an aggregate assessment of $240
million of tax, plus penalties and interest, for those years. The Company has
filed a Protest against the proposed assessment with the Appellate Division of
the IRS with respect to the years 1985 through 1987. The IRS has further
asserted that OPL is subject to U.S. taxation for the years 1988 through 1990
and has proposed an aggregate assessment of $170 million of tax, plus penalties
and interest, for those years. The Company has filed a Protest against the
proposed assessment with the Appellate Division of the IRS with respect to the
years 1988 through 1990. The IRS has not proposed an assessment for years
subsequent to 1990. However, the IRS may take similar positions for subsequent
years pending resolution of the years currently in dispute. OPL believes that it
has no tax liability, that it is not subject to U.S. taxation, and that there is
substantial authority for its position. It has vigorously contested the Notice
of Deficiency for 1984 and will vigorously contest proposed assessments for the
years 1985 through 1990 and any future assessments.
Overseas believes that its borrowing capabilities and cash flows from
reinsurance, investments and real estate and leasing operations will be a
sufficient source of capital for its ongoing operations. On a long-term basis,
Overseas believes that its resources and available credit capacity will continue
to be adequate to meet any obligations likely to arise under its existing lines
of business, and that its resources are sufficient to allow it to underwrite
additional reinsurance business as well as to acquire additional capital assets
in the future.
YEAR 2000 MATTERS
- -----------------
The Year 2000 issue is the result of the inability of computers,
software and other equipment utilizing microprocessors to recognize and properly
process data fields using two digits rather than four to define the applicable
year. Time-sensitive systems and software may recognize a date using "00" as the
year 1900 rather than the year 2000.
Overseas plans to have formal communications with all of its
significant vendors and large customers to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remediate their own Year 2000 Issue. However, there can be no guarantee that the
systems of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with the Company's systems, would not have a material adverse
effect on the Company's system.
The total cost to the Company of the Year 2000 issue has not yet been
calculated but is not anticipated to be material to its financial position or
results of operations in any given year.
25
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The Financial Statements of Overseas are filed together with this
Report: see pages [F-1 to F-14] which are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
- ------- ---------------------------------------------
on Accounting and Financial Disclosure
--------------------------------------
Not applicable.
26
<PAGE>
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Directors
- ---------
Set forth below is certain biographical information concerning each of
the directors.
- --------------------------------------------------------------------------------
Bruce M. Barone Age 48 Director since 1995
Bruce has been President and Chief Executive Officer of Overseas since
December 20, 1995. Previously, he served as Senior Vice President and Chief
Operating Officer since 1991, and as Vice President and member of the Executive
Committee since before 1990. Bruce has been associated with Overseas since its
incorporation in 1983. He became an employee of Overseas on January 1, 1995.
Previously, he held various senior executive positions at United Parcel Service
of America, Inc. ("UPS") since before 1990. He holds an MBA from the Graduate
School of Business of Columbia University and is a Certified Public Accountant.
- --------------------------------------------------------------------------------
Robert J. Clanin Age 54 Director since 1994
Prior to becoming a director, Bob served as Vice President of Overseas
from June 1990 to August 1994. He has been Senior Vice President, Treasurer and
Chief Financial Officer of UPS since 1994. Bob joined UPS in 1971. In 1979 he
was named Wisconsin District Controller and Southwest Region Controller in 1987.
In 1989 he became Treasury manager and then Finance Manager prior to assuming
his present responsibilities.
- --------------------------------------------------------------------------------
Joseph M. Pyne Age 50 Director since 1995
Joe is Senior Vice President - Corporate Marketing for UPS. In this
capacity, he directs UPS's worldwide marketing efforts in the U.S. and in more
than 200 countries and territories served by UPS. Previously, he has served as
Vice President - U.S. Marketing at UPS. He began his UPS career in 1969 and was
promoted to North Central region Business Development Manager in 1984. In 1989
he became National Marketing Planning Manager, and later he headed Marketing for
U.S. ground and air delivery services.
- --------------------------------------------------------------------------------
Cyril E. Rance Age 63 Director since 1995
Cyril was President and Chief Executive Officer of a large Bermuda
insurer until his retirement in 1990. He has more than 40 years experience in
all aspects of the insurance industry. He also has had a long and varied career
in civic and government service, including 10 years as a member of the Bermuda
Parliament. He is a director of Exel Limited, an insurance holding company, and
of several exempt companies registered in Bermuda.
27
<PAGE>
- --------------------------------------------------------------------------------
Edwin H. Reitman Age 55 Director since 1991
Ed became non-executive Chairman of the Board of Directors in 1995.
Previously, he served as President and Chief Executive Officer since 1991. Ed
has been Vice President - Corporate Marketing for UPS since May, 1997.
Previously, he was President of UPS Europe since April 1995. In that capacity,
he had overall responsibility for UPS's operations in Europe, Africa and the
Middle East. Ed was Manager of the UPS Legal Department from 1989 until 1995.
- --------------------------------------------------------------------------------
Walter A. Scott Age 60 Director since 1995
Prior to his retirement in September 1994, Walter served as Chairman,
President and Chief Executive Officer of ACE Limited, an insurer based in
Bermuda. He has served as a director of ACE since 1989 and as a consultant to
the Company after his retirement until September 1996. Prior to 1989, Walter
served in various senior positions with Primerica Corporation, (now Travelers
Corporation), a major publicly owned diversified financial services company. He
is also a director of Annuity and Life Re Holdings Ltd., an insurer based in
Bermuda.
Executive Officers
- ------------------
Listed below is certain information relating to the executive officers
of OPL.
<TABLE>
<CAPTION>
Name Age Officers
- -------------------- --- -------------------------------------
<S> <C> <C>
Bruce M. Barone 48 President and Chief Executive Officer
Thomas E. Butler 53 Vice President and Secretary
Leopold A. Schmidt 54 Vice President and Treasurer
</TABLE>
For biographical information on Mr. Barone, see above section on
"Directors".
Mr. Butler serves as Vice President - Law and Secretary of Overseas.
Mr. Butler has served as Vice President of Overseas since June 1990 and
Secretary of Overseas since August 1994. Mr. Butler also served as Vice
President and Secretary of Overseas Partners Capital Corp. ("OPCC") since 1995
as well as a director. Prior to his Overseas service, Mr. Butler was a member of
the UPS Legal Department since before 1990.
Mr. Schmidt serves as Vice President - Finance and Treasurer of
Overseas. He also served as Vice President and director of OPCC since 1994.
Prior to Mr. Schmidt's Overseas duties, he was a member of the UPS Financial
Planning Department since before 1990.
The executive officers of Overseas serve at the pleasure of the Board
of Directors.
28
<PAGE>
Item 11 Executive Compensation
- ------- ----------------------
Report of Compensation Committee on Executive Compensation
- ----------------------------------------------------------
The Compensation Committee of the Board of Directors has furnished the
following report on Executive Compensation:
The Compensation Committee of the Board of Directors has
responsibility for determining the compensation of the Chief Executive Officer
and for approving the compensation of the other officers of Overseas and its
subsidiaries upon recommendation of the CEO. Overall compensation currently
includes salary, bonus, and stock appreciation rights. The Committee also
determines cost of living allowances paid to executive officers resident in
Bermuda. The Committee is assisted in carrying out its responsibility by
Overseas management and by outside consultants.
In determining appropriate compensation levels, the Committee reviews
data received from a consultant concerning compensation for comparable positions
at reinsurance and real estate investment companies in Bermuda and the United
States, but does not place great weight on such data. The 1997 compensation of
Overseas' executive officers was less than the median compensation levels at the
companies studied. Companies studied are not limited to those in the Standard &
Poor's 500 Index and the Standard & Poor's Multi-Line Insurance Companies Index
used in the performance charts following this report.
All elements of the current compensation package are payable in cash.
With respect to the salaries and bonuses of the CEO and other executive
officers, the Committee does not employ formulas but instead exercises its
judgment based on considerations including overall responsibilities, experience
and ability, individual performance and past compensation. The Committee
stresses collaborative working relationships and does not use objective
corporate performance standards in determining the salaries and bonuses of
individual executive officers, including the CEO.
Awards under the Stock Appreciation Rights Plan are long-term awards
intended to promote growth in shareowner value and continuity of employment.
The number of performance units comprising each award is determined by a formula
based on the salary of the recipient at the time of grant. The amount received
upon exercise of the award depends on the performance of Overseas Common Stock
over the five-year period between grant and exercise.
Cost of living allowances are intended to permit executive officers
who have relocated to Bermuda from the United States to maintain a comparable
standard of living.
The Compensation Committee
Robert J. Clanin, Chairman
Edwin H. Reitman
Walter A. Scott
29
<PAGE>
Performance Graph
The following graph shows a five year comparison of cumulative total
shareowner returns for Overseas, the Standard & Poor's 500 Index (the "S&P 500")
and the Standard & Poor's Multi-Line Insurance Companies Index (the "S&P Multi-
Line"). The comparison of the cumulative total returns on investment (change in
annual stock price plus reinvested dividends) for each of the annual periods
assumes that $100 was invested on December 31, 1992 in each of Overseas, the S&P
500 and the S&P Multi-Line.
Comparison Of Five Year Cumulative Total Returns
(Overseas, S&P 500, S&P Multi-Line)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Overseas 100.00 125.00 147.16 187.67 233.97 294.10
- -----------------------------------------------------------------------------------------
S&P 500 100.00 109.92 111.34 152.65 187.28 249.28
- -----------------------------------------------------------------------------------------
S&P Multi-Line 100.00 111.82 118.04 173.11 209.34 327.23
- -----------------------------------------------------------------------------------------
</TABLE>
Overseas Common Stock is not listed on a securities exchange or traded
in the over-the-counter market. The current price of Overseas Common Stock at
any time during a year is equal to the book value of Overseas Common Stock on
December 31 of the prior year as reported in Overseas' Annual Report to
Shareowners. The current price of Overseas Common Stock is announced
approximately ten days after the end of the year. Because the date varied during
the years listed above, the performance graph assumes that the price was
announced on December 31.
30
<PAGE>
The following table shows the cash compensation paid or to be paid by
Overseas or any of its subsidiaries, as well as certain other compensation paid
in 1997, 1996 and 1995 to its Named Executive Officers in all capacities in
which they served:
SUMMARY COMPENSATION TABLE
- --------------------------
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Stock
Other Appreciation
-----
Name and Principal Position Year Salary Bonus Compensation (1) Rights
- --------------------------- ---- ------ ----- ---------------- ------
<S> <C> <C> <C> <C> <C>
Bruce M. Barone 1997 $243,750 $71,740 $234,035 13,870
President and Chief Executive Officer 1996 $212,500 $57,300 $ 54,001 13,267
1995 $179,500 $44,200 -0- 5,794
Thomas E. Butler 1997 $126,250 $40,512 $132,851 3,832
Vice President and Secretary (2) 1996 $120,000 $34,762 -0- 3,996
1995 $113,750 $29,750 -0- 4,056
Leopold A. Schmidt 1997 $131,250 $37,980 $165,675 3,938
Vice President and Treasurer (2) 1996 $112,500 $30,560 $ 27,905 3,747
1995 $100,000 $23,460 -0- 3,566
</TABLE>
(1) Other compensation consists of cost of living allowances and reimbursement
of additional U.S. income taxes paid as a result of the foreign assignment.
These allowances are intended to permit such executives to maintain comparable
living standards. Messrs. Barone and Schmidt became Bermuda residents in
September and November of 1996, respectively. Mr. Butler became a Bermuda
resident in January 1997.
(2) Messrs. Butler and Schmidt were designated Executive Officers of Overseas on
March 14, 1996.
Stock Appreciation Rights - Grants
- ----------------------------------
The following table sets forth information concerning grants of Stock
Appreciation Rights to the Named Executive Officers in 1997:
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
% of Total Rates of OPL Stock
Rights Appreciation for
Rights Granted to Appreciation Expiration Rights Term
-----------
Name Granted Employees Base (1) Date (2) 5% 10%
- ---- ------- --------- -------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Barone 13,870 52% $14.24 9/30/02 $42,564 $91,664
Thomas E. Butler 3,832 14% $14.24 9/30/02 $11,760 $25,325
Leopold A. Schmidt 3,938 15% $14.24 9/30/02 $12,085 $26,025
</TABLE>
(1) Represents the price of Overseas Common Stock on the date of grant.
(2) Generally, Rights may not be exercised until the expiration of five years
from the date of grant, and then only during a 30-day period following the
mailing date of OPL's Annual Report on Form 10-K for the prior year.
31
<PAGE>
Stock Appreciation Rights Exercises and Holdings
- -------------------------------------------------
The following table sets forth information concerning Stock
Appreciation Rights exercised in 1997 by the Named Executive Officers and the
value of their unexercised Rights on December 31, 1997.
Aggregated Stock Appreciation Rights Exercised in 1997 and Year-End Rights
--------------------------------------------------------------------------
Value
-----
<TABLE>
<CAPTION>
Number of Unexercised Rights Value of Unexercised Rights
at 12/31/97 at 12/31/97
----------- -----------
Cash Realized
Name Upon Exercise Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Bruce M. Barone $67,721 -0- 46,170 -0- $263,948
Thomas E. Butler $43,394 -0- 20,528 -0- $136,504
Leopold A. Schmidt $17,450 -0- 15,651 -0- $ 93,328
</TABLE>
Retirement Plans
- ----------------
The following table shows the estimated annual retirement benefit
payable on a single life only annuity basis to participating employees,
including the Named Executive Officer, under Overseas' Retirement Plan and
Coordinating Benefit Plan (the "Plans") at age 65 who are also entitled to
receive $15,912 per year (maximum currently payable) in primary Social Security
benefits:
Pension Plan Table
- ------------------
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits (as of 12/31/97)
for Years of Service (1) (2) (3) (4)
------------------------------------
Average
Remuneration 15 Years 20 Years 25 Years 30 Years
- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 100,000 $ 21,022 $ 28,029 $ 35,027 $ 42,044
$ 125,000 $ 27,272 $ 36,363 $ 45,453 $ 54,544
$ 150,000 $ 33,522 $ 44,696 $ 55,870 $ 67,044
$ 175,000 $ 39,772 $ 53,029 $ 66,287 $ 79,544
$ 200,000 $ 46,022 $ 61,363 $ 76,703 $ 92,044
$ 250,000 $ 58,522 $ 78,029 $ 97,537 $117,044
$ 300,000 $ 71,022 $ 94,696 $118,370 $142,044
$ 350,000 $ 83,522 $111,363 $139,203 $167,044
$ 400,000 $ 96,022 $128,029 $160,037 $192,044
$ 450,000 $108,522 $144,696 $180,870 $217,044
$ 500,000 $121,022 $161,363 $201,703 $242,044
</TABLE>
(1) Under the Overseas' Retirement Plan, participants receive credit for prior
service with UPS. In the case of participants with UPS deferred vested
benefits, Overseas is responsible for the difference between the amounts
shown above and the amounts such participants receive from UPS at
retirement.
(2) Amounts exceeding $125,000 would be paid pursuant to Overseas' Coordinating
Benefit Plan.
(3) For 1997, no more than $160,000 (which is adjusted from time to time by the
Internal Revenue Service) of cash compensation could be taken into account
in calculating benefits payable under OPCC Retirement Plan.
(4) Participants who elect payment forms with survivor options will receive
lesser monthly amounts than those shown in the above table.
32
<PAGE>
The compensation covered by the Plans whose benefits are summarized in
the table above includes salary plus bonus. The Covered Compensation for each
participant in the Plans is the average Covered Compensation of the participant
during the five highest consecutive years out of the last ten full calendar
years of service.
Estimated or actual credited years of service under the Plans to the Named
Executive Officers was as follows: Barone - 24 years, Butler - 30 years and
Schmidt - 29 years.
The Plans permit participants with 25 or more years of benefit service to
retire as early as age 55 with no or only a limited reduction in the amount of
their monthly benefits.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Two members of the Compensation Committee of the Board of Directors of
Overseas were officers of Overseas prior to 1997. Robert J. Clanin served as
Vice President of Overseas from 1990 until 1994, and Edwin H. Reitman served as
President and Chief Executive Officer of Overseas from 1991 until 1995.
33
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Stock Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------
Set forth below is information relating to the beneficial ownership of
Overseas Common Stock by (i) each person known to Overseas to own beneficially
more than five percent of the outstanding shares, (ii) each director or director
nominee, (iii) the Chief Executive Officer and the Named Executive Officers (iv)
all directors and executive officers as a group:
<TABLE>
<CAPTION>
Name Common Stock Held as of February 28, 1998(1)
---- --------------------------------------------
Additional Shares in which
the Director or Nominee
Shares Beneficially has, or Participates in
Owned, Directly or by the Voting Investment Total Shares and
Family Members (2) Power (3) Percent of Class
--------------------- --------- ----------------
<S> <C> <C> <C>
Bruce M. Barone
Mintflower Place
8 Par-la-Ville Road
P.O. Box 1581
Hamilton, HM GX, Bermuda 29,235 0 29,235 (.02%)
Thomas E. Butler
Mintflower Place
8 Par-la-Ville Road
P.O. Box 1581
Hamilton, HM GX, Bermuda 15,078 0 15,078 (.01%)
Robert J. Clanin
55 Glenlake Parkway, NE
Atlanta, GA 30328 27,216 5,641,407 (a)(b) 5,668,623 (4.33%)
Joseph M. Pyne
55 Glenlake Parkway, NE
Atlanta, GA 30328 19,919 0 19,919 (.01%)
Cyril E. Rance
Blue Anchorage
No. 6 Agars Hill - Point Shares
Pembroke HM 05, Bermuda 1,000 0 1,000 (.00%)
Edwin H. Reitman
55 Glenlake Parkway, NE
Atlanta, GA 30328 33,879 0 33,879 (.03%)
Leopold A. Schmidt
Mintflower Place
8 Par-la-Ville Road
P.O. Box 1581
Hamilton, HM GX, Bermuda 29,603 0 29,603 (.02%)
Walter A. Scott
c/o Tempest Re
Par-la-Ville Place
14 Par-la-Ville Road
Hamilton HM 08 Bermuda 1,000 0 1,000 (.00%)
All directors and executive officers
as a group(8) (including the above) 156,930 5,641,407 5,798,337 (4.43%)
</TABLE>
34
<PAGE>
(1) These holdings are reported in accordance with regulations of the Securities
and Exchange Commission ("SEC") requiring the disclosure of shares as to which
directors and officers hold voting or disposition power, notwithstanding the
fact that they are held in a fiduciary, rather than a personal, capacity and
that the power is shared among a number of fiduciaries including, in several
cases, corporate trustees, directors or other persons who are neither officers
nor directors of Overseas.
(2) The amounts shown in this column include an aggregate of 27,871 shares owned
by or held in trust for members of the families of Messrs. Barone, Butler,
Clanin, and Schmidt as to which they disclaim all beneficial ownership.
(3) Neither the directors, nominees, other officers nor members of their
families, have any ownership rights in the shares listed in this column. Of the
shares (a) 5,304,245 shares are owned by a charitable foundation on whose Board
of Trustees Mr. Clanin and other persons serve and (b) 337,162 shares are held
by a charitable foundation of which Mr. Clanin and other persons are trustees.
See note 4 below.
(4) This number reflects the total number of shares held in a fiduciary capacity
after adjustment to eliminate duplications.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
Common Relationships With UPS
- -----------------------------
Overseas was incorporated under Bermuda law in June 1983 by UPS. On
December 31, 1983, prior to commencing operations, Overseas was spun off when
UPS paid a special dividend to shareowners of one share of Common Stock for each
share of UPS Common Stock then outstanding, resulting in the distribution of
approximately 97% of the outstanding Common Stock.
Mr. Clanin, an Overseas director, is an executive officer and director of
UPS and Mr. Pyne, an Overseas director, is an executive officer of UPS. In
considering which risks related to UPS's business to reinsure, or which leasing
or other arrangements to enter into with UPS, directors and officers of Overseas
who are also directors and officers and shareowners of UPS must consider the
impact of their business decisions on each of the two companies. Although
prevailing market conditions are among the factors considered by them in making
such decisions, there can be no assurance that transactions relating to the two
companies will be on the most favorable terms that could be obtained by either
party in the open market.
Overseas does not have any formal conflict resolution procedures.
Nevertheless, in connection with the reinsurance by Overseas of risks related to
the business of UPS, Overseas believes that the rates charged by the primary
insurers reinsured by Overseas are competitive with those charged to shippers
utilizing other carriers. Additionally, in connection with major transactions in
which UPS and Overseas have been involved, primarily leasing transactions,
Overseas has generally obtained fairness or valuation opinions from one or more
leading investment banking firms or other organizations with significant
expertise in the evaluation of the interests involved.
35
<PAGE>
Reinsurance Transactions
- ------------------------
Overseas was organized to reinsure shipper's risks relating to packages
carried by UPS as a common carrier as well as to underwrite other reinsurance
for insureds unaffiliated with UPS. Since commencing operations on January 1,
1984, Overseas' primary reinsurance business has been reinsuring insurance
issued by United States-based insurance companies unaffiliated with UPS or
Overseas. This reinsurance covers the risk of loss or damage to shippers'
packages carried by UPS's subsidiaries and unaffiliated foreign common carriers
whose declared value exceeds $100 or equivalent in foreign currency. The
reinsurance of excess value insurance does not involve transactions conducted
between UPS and Overseas. Various subsidiaries of American International Group,
Inc., (an insurance company unaffiliated with Overseas or UPS) insure customer
packages in return for premiums paid by the customers. Overseas reinsures these
primary insurers, whose premium payments constitute Overseas' largest source of
revenues and profits. Reinsurance premiums earned by Overseas for reinsuring
these risks from January 1, 1997 to December 31, 1997 were approximately $367
million or over 32% of Overseas' 1997 revenues, a reduction of 28% over 1996.
Overseas' reinsurance business has also included reinsurance of workers
compensation insurance issued by another unaffiliated United States-based
insurance company covering risks of a UPS subsidiary in the State of California.
Mr. Clanin, an Overseas director, is an executive officer and director of
UPS and Mr. Pyne, an Overseas director, is an executive officer of UPS. In
considering which risks related to UPS's business to reinsure, or which leasing
or other arrangements to enter into with UPS, directors and officers of Overseas
who are also directors and officers and shareowners of UPS must consider the
impact of their business decisions on each of the two companies. Although
prevailing market conditions are among the factors considered by them in making
such decisions, there can be no assurance that transactions relating to the two
companies will be on the most favorable terms that could be obtained by either
party in the open market. Overseas does not have any formal conflict resolution
procedures. Nevertheless, in connection with the reinsurance by Overseas of
risks related to the business of UPS, Overseas believes that the rates charged
by the primary insurers reinsured by Overseas are competitive with those charged
to shippers utilizing other carriers. Additionally, in connection with major
transactions in which UPS and Overseas have been involved, primarily leasing
transactions, Overseas has generally obtained fairness or valuation opinions
from one or more leading investment banking firms or other organizations with
significant expertise in the evaluation of the interests involved.
Leasing Transactions
- --------------------
Overseas' business has included leasing certain aircraft and real property
to subsidiaries of UPS through Overseas Partners Capital Corporation ("OPCC").
OPCC is a wholly owned subsidiary of Overseas and Overseas has guaranteed OPCC's
performance of the leasing arrangements described below. In December 1989, OPCC
acquired from UPS the Ramapo Ridge Facility ("the Facility") Beginning in July
1990, the Facility was leased to UPS for an initial term ending in 2019. UPS
uses the facility as a data processing, telecommunications and operations
center. Lease payments have fixed and variable components. The fixed component
provides for aggregate lease payments of approximately $216 million over the
initial term of the lease. The variable component of the lease payments is based
on the number of customer accounts maintained by UPS.
36
<PAGE>
In December 1989, OPCC acquired from UPS for approximately $67.9 million
its rights to purchase from the Boeing Company five 757 aircraft which were then
being manufactured. The aircraft were delivered to OPCC in 1990 and are leased
to UPS for a term ending in 2012. Lease payments have fixed and variable
components. The fixed component provides for minimum aggregate lease payments of
approximately $376.5 million over the term of the lease. The variable component
is based on the number of flight hours recorded for the aircraft. Rentals began
in the fourth quarter of 1990.
OPCC has irrevocably assigned the right to receive the fixed component of
rentals on the Boeing 757 aircraft and Facility leases to its subsidiary, OPL
Funding Corp. ("OPL Funding"), a Delaware corporation. OPL Funding pledged its
interest in these payments to secure bonds issued to finance the acquisition of
the leased assets. UPS's obligation to pay the fixed rentals to OPL Funding is
absolute and unconditional during the initial term of each lease, and continues
after an early lease termination unless UPS pays to OPL Funding an amount
sufficient to defease the remaining interest payments on the bonds. In the
event that OPCC fails to pay certain income taxes, UPS is obligated to pay
additional rentals to provide for such taxes. OPCC is required to reimburse
UPS the amount of any such termination or tax payments.
At the conclusion of each of the leases, UPS may purchase the aircraft and
the Facility at fair market value. UPS has an option to purchase the land on
which the Facility is located, but not the buildings, from OPCC in 2050 for
approximately $63.7 million, subject to certain adjustments for increases in the
fair market value of the land. In 1997, OPCC and its subsidiary received rental
payments of approximately $42.2 million in the aggregate from UPS pursuant to
the leases described above.
Section 16(a) Filings
- ---------------------
Based solely on the review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934 that have been received, Overseas believes that
all filing requirements applicable to its officers, directors and beneficial
owners of greater than 10% of its Common Stock have been complied with.
37
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement
- -------- Schedules and Reports on Form 8-K
---------------------------------
(a) 1. Financial Statements.
- See Index to Financial Statements and Financial Statement
Schedules at page F-1, which is incorporated herein by reference.
2. Financial Statement Schedules.
- See Index to Financial Statements and Financial Statement
Schedules at page F-1, which is incorporated herein by reference.
3. List of Exhibits.
- See Exhibit Index at page E-1, which is incorporated herein by
reference.
(b) Reports on Form 8-K.
- No reports on Form 8-K were filed during the quarter ended
December 31, 1997.
(c) Exhibits required by Item 601 of Regulation S-K.
- See Exhibit Index at page E-1, which is incorporated herein by
reference.
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Overseas Partners Ltd. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in Hamilton,
Bermuda.
OVERSEAS PARTNERS LTD.
DATE: MARCH 31, 1998 BY: /s/ BRUCE M. BARONE
-------------------------------
BRUCE M. BARONE
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bruce M. Barone President, Chief Executive Officer March 31, 1998
- ---------------------------------------
(Bruce M. Barone) (Principal Financial Officer) and
Director
/s/ Robert J. Clanin Director March 31, 1998
- ---------------------------------------
(Robert J. Clanin)
/s/ Joseph M. Pyne Director March 31, 1998
- ---------------------------------------
(Joseph M. Pyne)
/s/ Cyril E. Rance Director March 31, 1998
- ---------------------------------------
(Cyril E. Rance)
/s/ Edwin H. Reitman Chairman March 31, 1998
- ---------------------------------------
(Edwin H. Reitman) of the Board of Directors and
Director
/s/ Leopold A. Schmidt Vice President and Treasurer March 31, 1998
- ---------------------------------------
(Leopold A. Schmidt) (Principal Accounting Officer)
/s/ Walter A. Scott Director March 31, 1998
- ---------------------------------------
(Walter A. Scott)
/s/ Michael J. Moletta Authorized Representative in the March 31, 1998
- ---------------------------------------
(Michael J. Molletta) United States
</TABLE>
39
<PAGE>
OVERSEAS PARTNERS LTD.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES COMPRISING ITEMS 8
AND 14(a) OF THE ANNUAL REPORT
ON FORM 10-K TO THE SECURITIES
AND EXCHANGE COMMISSION
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Item 8. Financial Statements Page Number
- ------- -------------------- -----------
<S> <C> <C>
Independent Auditors' Report F - 2
Consolidated Balance Sheets December 31, 1997 and F - 3
1996
Statements of Consolidated Income years ended F - 4
December 31, 1997,1996, and 1995
Statements of Consolidated Members' Equity years F - 5
ended December 31, 1997, 1996 and 1995
Statements of Consolidated Cash Flows years ended F - 6
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements years F - 7
ended December 31, 1997, 1996 and 1995 to
F - 14
</TABLE>
Item 14(a). Financial Statement Schedules
- ----------- -----------------------------
All schedules are omitted because they are not
applicable, or not required, or because the
required information is included in the
consolidated financial statements or notes
thereto, with the exception of the Summary of
Investment Schedule which is included in the text
of this Form 10-K, page 12.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Members
of Overseas Partners Ltd.
Hamilton, Bermuda
We have audited the accompanying consolidated balance sheets of Overseas
Partners Ltd. and its Subsidiaries as of December 31, 1997 and 1996, and the
related statements of consolidated income, members' equity, and cash flows for
each of the three years in the period ended December 31, 1997. 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 auditing standards generally accepted
in the United States of America. 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 Overseas Partners Ltd. and its
Subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE
Hamilton, Bermuda
January 8, 1998
F-2
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(U.S.$ IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 355,056 $ 394,343
Investments (principally at fair value) 1,821,837 1,478,685
Receivables:
Interest, premiums and other 144,869 80,313
Rentals 14,929 5,857
Deposits with insurers 74,162 34,989
Deferred acquisition costs 47,701 27,104
Real Estate and Leasing:
Operating leases with UPS 297,708 306,141
Finance leases 48,035 49,201
Hotel 167,333 169,624
Office buildings 621,346 618,157
Other assets
Common stock held for stock plans 24,859 6,944
Goodwill 24,756 --
Other 25,078 20,811
- -----------------------------------------------------------------------
Total assets $3,667,669 $3,192,169
- -----------------------------------------------------------------------
LIABILITIES AND MEMBERS' EQUITY:
LIABILITIES:
Accrued losses and loss expenses $ 338,425 $ 265,166
Accounts payable and other accruals 48,225 100,036
Unearned premiums 185,425 104,412
Deferred income taxes 64,478 47,668
Debt 758,416 713,790
Minority interest 45,538 38,300
- -----------------------------------------------------------------------
Total liabilities $1,440,507 $1,269,372
- -----------------------------------------------------------------------
MEMBERS' EQUITY:
Preference stock, par value $.10 per share;
authorized 200,000,000 shares; none issued -- --
Common stock, par value, $.10 per share;
authorized 900,000,000 shares; issued and
outstanding, 131,000,000 shares in 1997 and
135,000,000 shares in 1996 13,100 13,500
Contributed surplus 26,642 25,331
Retained earnings 2,187,420 1,883,966
- -----------------------------------------------------------------------
Total members' equity 2,227,162 1,922,797
- -----------------------------------------------------------------------
Total liabilities and members' equity $3,667,669 $3,192,169
- -----------------------------------------------------------------------
BOOK VALUE PER SHARE $ 17.00 $ 14.24
- -----------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(U.S.$ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------- ---------
REVENUES:
<S> <C> <C> <C>
Reinsurance premiums written $ 720,084 $560,561 $500,652
Change in unearned premiums (81,013) (29,473) (36,742)
- ----------------------------------------------------------------------------------
Reinsurance premiums earned 639,071 531,088 463,910
Operating leases with UPS 42,233 43,359 40,456
Finance leases 3,991 4,092 4,256
Hotel 91,361 86,175 79,012
Office buildings 110,355 17,115 1,726
Interest from debt securities 53,367 55,538 87,361
Net holding gain on trading securities 187,139 91,758 48,636
Net gain on investments available-for-sale -- -- 8,520
Amortization of held-to-maturity securities 4,887 4,483 4,112
Dividends 2,037 14,202 2,071
- ----------------------------------------------------------------------------------
1,134,441 847,810 740,060
- ----------------------------------------------------------------------------------
EXPENSES:
Reinsurance losses and loss expenses 331,879 236,293 189,373
Reinsurance commissions, taxes and other 81,885 56,941 40,880
Depreciation 32,596 17,497 13,512
Real estate and leasing operating expenses 126,371 79,028 67,018
Interest 62,442 42,156 38,341
Minority interest in earnings 1,321 -- --
Other 4,022 3,868 2,328
- ----------------------------------------------------------------------------------
640,516 435,783 351,452
- ----------------------------------------------------------------------------------
Income before income taxes 493,925 412,027 388,608
Income taxes - deferred (16,810) (10,802) (17,809)
- ----------------------------------------------------------------------------------
NET INCOME $ 477,115 $401,225 $370,799
- ----------------------------------------------------------------------------------
NET INCOME PER SHARE $3.64 $2.97 $2.73
- ----------------------------------------------------------------------------------
NUMBER OF SHARES (IN MILLIONS) 131 135 136
- ----------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(U.S.$ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
Unrealized Total
Preference Common Stock Contributed Retained Gain on Members'
------------
Stock Shares Amount Surplus Earnings Investments Equity
----- ------ ------ ------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $ -- 139,000 $13,900 $25,331 $1,332,702 $ 1,998 $1,373,931
Net income -- -- -- -- 370,799 -- 370,799
Dividends paid ($.60 per share) -- -- -- -- (81,600) -- (81,600)
Retirement of common stock -- (3,000) (300) -- (29,340) -- (29,640)
Change in unrealized gain on
investments -- -- -- -- -- 38,668 38,668
Transfer of unrealized
gain to income $ -- -- -- -- -- (40,666) (40,666)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 -- 136,000 $13,600 $25,331 $1,592,561 $ -- $1,631,492
Net income -- -- -- -- 401,225 -- 401,225
Dividends paid ($.72 per share) -- -- -- -- (97,920) -- (97,920)
Retirement of common stock -- (1,000) (100) -- (11,900) -- (12,000)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 $ -- 135,000 $13,500 $25,331 $1,883,966 $ -- $1,922,797
- -------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- -- 477,115 -- 477,115
Dividends paid ($.90 per share) -- -- -- -- (117,101) -- (117,101)
Gain on issuance of common
stock held for stock plans -- -- -- 1,311 -- -- 1,311
Retirement of common stock -- (4,000) (400) -- (56,560) -- (56,960)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $ -- 131,000 $13,100 $26,642 $2,187,420 $ -- $2,227,162
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(U.S.$ IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 477,115 $ 401,225 $ 370,799
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 32,596 17,497 13,512
Income taxes - deferred 16,810 10,802 17,809
Minority interest in earnings 1,321 -- --
Net holding gain on trading securities (187,139) (91,758) (48,636)
Net gain on investments available-for-sale -- -- (8,520)
Proceeds from sale of investments 1,635,416 1,153,594 --
Purchase of investments (1,785,831) (1,209,433) --
Other 1,429 (7,905) (2,853)
Changes in assets and liabilities:
Interest, premiums and other receivables (64,556) (3,537) (18,481)
Rentals receivable (9,072) (1,710) (3,857)
Deposits with insurers (39,173) 28,103 14,389
Deferred acquisition costs (20,597) (10,772) (6,668)
Common stock held for stock plans (17,915) (6,944) --
Other assets (4,267) (12,758) (593)
Accrued losses and loss expenses 73,259 50,959 (5,104)
Accounts payable and other accruals (51,811) (1,697) (2,061)
Unearned premiums 81,013 29,473 36,742
- --------------------------------------------------------------------------------------------------
Net cash flow provided by operating activities 138,598 345,139 356,478
- --------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from maturities and sale of investments -- -- 2,334,180
Purchases of investments -- -- (2,634,850)
Proceeds from termination of finance leases -- -- 14,541
Acquisition of office buildings -- (232,969) (62,131)
Additions to fixed assets (25,061) (2,225) (23,445)
Goodwill (24,756) -- --
- --------------------------------------------------------------------------------------------------
Net cash flow used by investing activities (49,817) (235,194) (371,705)
- --------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Gain on issuance of common stock held for stock plans 1,311 -- --
Retirement of common stock (56,960) (12,000) (29,640)
Dividends paid (117,101) (97,920) (81,600)
Repayment of debt (215,318) (122,641) (1,325)
Borrowings 260,000 189,700 35,000
- --------------------------------------------------------------------------------------------------
Net cash flow used by financing activities (128,068) (42,861) (77,565)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (39,287) 67,084 (92,792)
Cash and cash equivalents:
Beginning of year 394,343 327,259 420,051
- --------------------------------------------------------------------------------------------------
End of year $ 355,056 $ 394,343 $ 327,259
- --------------------------------------------------------------------------------------------------
Amounts paid for:
U.S. income taxes $ 814 $ 168 $ 619
- --------------------------------------------------------------------------------------------------
Interest $ 63,661 $ 49,923 $ 38,284
- --------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accompanying consolidated financial statements include the accounts of
Overseas Partners Ltd. (OPL) and its subsidiaries (collectively "Overseas").
Intercompany balances and transactions have been eliminated in consolidation.
The accounts have been prepared in accordance with accounting principles
generally accepted in the United States of America.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Overseas is engaged in the property, casualty and life reinsurance business
and in the real estate and leasing business. A major source of its reinsurance
business is the reinsurance of shipper's insurance issued by U.S. based
insurance companies covering loss or damage to shipper's packages carried by
subsidiaries of United Parcel Service (UPS). OPL expects that package
reinsurance will continue to be a significant part of its business. However,
there can be no assurance that UPS or its subsidiaries will continue to utilize
the insurance arrangements for which OPL provides reinsurance.
For its property and casualty reinsurance business, premiums written are
recognized as earned on a pro-rata basis over the periods of the respective
policies. Unearned premiums and acquisition costs, primarily commissions and
taxes applicable to the unexpired periods of the policies in force, are
deferred.
Reinsurance premiums which are subject to adjustments are estimated based upon
available information. Any variances from the estimates are recorded in the
periods in which they become known.
Losses and loss expenses on property and casualty business include outstanding
losses, as reported, and a provision for losses incurred but not reported which
is based on estimates of the ultimate liability for losses. Although Overseas
believes this provision is adequate, actual losses may vary from such estimates.
Any such variances will be recorded in periods in which they become known.
For its life reinsurance business, Overseas includes the full amount of
reinsurance provided as a liability in accrued losses and loss expenses and as
an asset in deposits with insurers. Premiums and related liabilities for future
policy benefits are recognized when premiums are due.
Letters of credit of $371.1 million and $356.7 million at December 31, 1997
and 1996 in favor of certain reinsureds were established and are amended
annually based upon the reinsureds' actual experience.
All highly liquid debt instruments with maturities of three months or less at
the date of acquisition are considered cash equivalents.
Debt issuance expenses, included in other assets, and original issue discounts
are amortized over the term of the related debt. OPL common stock held for
stock plans is carried at cost. Goodwill is amortized on a straight-line basis
over 10 years.
F-7
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
Real estate and leasing activities include finance leases, operating leases
with UPS and the operation of a hotel and four office buildings. Income from
finance leases is recognized by a method which produces a constant periodic rate
of return on the outstanding investment in the lease. Income from operating
leases is recognized as rentals and becomes receivable according to the
provisions of the leases. The hotel air rights lease is prepaid through the
year 2077 (the expiration date of the lease) and is amortized under the
straight-line method over the life of the lease. Equipment under operating
leases, the hotel and the office building are recorded at cost less accumulated
depreciation, which is provided under the straight-line method over the
estimated useful lives as follows:
Operating Leases with UPS
- -------------------------
Facility 40 years
Aircraft 35 years
Hotel
- -----
Building and improvements 40 years
Furniture, fixtures and equipment 10 years
Office Buildings
- ----------------
Building and improvements 40 years
Furniture, fixtures and equipment 7 years
Effective December 31, 1995, Overseas adopted FASB's Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities and reclassified its available-for-sale securities as trading
securities. Trading securities are carried at fair value. Available-for-sale
securities were carried at fair value, with unrealized gains and losses, net of
applicable income taxes, excluded from net income and reported as a separate
component of Members' Equity. In conjunction with this transfer, Overseas
recognized in income in 1995 an unrealized gain of $48.6 million and related
taxes of $7.9 million, of which $7.0 million of gains and $5.0 million of taxes
are from prior periods that were previously included in a separate component of
Members' Equity. Non-U.S. dollar securities are translated into U.S. dollars at
year end rates. Overseas classifies certain U.S. Treasury notes as held-to-
maturity securities carried at amortized cost, as Overseas has the ability and
intent to hold them to maturity. Realized gains and losses on sales of
available-for-sale investments are recognized in net income on the specific
identification basis.
Estimated fair value of investments are based on market quotations and
estimated fair value of debt is based on dealer supplied quotations.
Net income and book value per share are based on 131 million shares in 1997,
135 million shares in 1996 and 136 million shares in 1995.
2. TAXES
-----
OPL is incorporated under the laws of the Islands of Bermuda and does not
consider itself to be engaged in a trade or business in the United States and,
therefore, does not expect to be subject to U.S. income taxes. Certain of OPL's
subsidiaries engage in business in the U.S., primarily Overseas Partners Capital
Corp. ("OPCC"), and as a result, it, but not OPL, is subject to U.S. income
taxes. Under current Bermuda law, OPL is not obligated to pay any tax in
Bermuda based upon income or capital gains.
F-8
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
The United States Internal Revenue Service (IRS) has issued a Notice of
Deficiency with respect to the Company's 1984 taxable year in which it asserted
that the Company is subject to U.S. tax in the amount of $53 million for the
year 1984, plus penalties and interest for that year. On August 18, 1995, the
Company filed a Petition in the United States Tax Court contesting the proposed
assessment of tax in the Notice of Deficiency. A trial was held before the
United States Tax Court in two sessions during the fall of 1997, the second of
which ended on November 7, 1997. An additional trial session previously
scheduled for the week of December 8, 1997 was cancelled by agreement of the
Company and the IRS. Trial briefs are due to be filed on or before February 10,
1998 and reply briefs are due to be filed on or before April 16, 1998. The IRS
has also asserted that OPL is subject to U.S. taxation for its 1985 through 1987
taxable years and has proposed an aggregate assessment of $240 million of tax,
plus penalties and interest, for those years. The Company has filed a Protest
against the proposed assessment with the Appellate Division of the IRS with
respect to the years 1985 through 1987. The IRS has further asserted that OPL
is subject to U.S. taxation for the years 1988 through 1990 and has proposed an
aggregate assessment of $170 million of tax, plus penalties and interest, for
those years. The Company has filed a Protest against the proposed assessment
with the Appellate Division of the IRS with respect to the years 1988 through
1990. The IRS has not proposed an assessment for years subsequent to 1990.
However, the IRS may take similar positions for subsequent years pending
resolution of the years currently in dispute. OPL believes that it has no tax
liability, that it is not subject to U.S. taxation, and that there is
substantial authority for its position. It has vigorously contested the Notice
of Deficiency for 1984 and will vigorously contest proposed assessments for the
years 1985 through 1990 and any future assessments.
Deferred income taxes calculated at the U.S. Federal statutory rate of 35%
plus appropriate state income taxes on the income of those subsidiaries engaged
in business in the United States result from temporary differences in the
recognition of revenues and expenses for financial statement and income tax
purposes. The tax effects of those temporary differences are as follows: (000s
omitted)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Excess of tax over book depreciation $ 7,563 $ 8,149 $ 6,152
Benefit of net operating loss carryovers 4,948 96 (930)
Other accrued expenses not currently deductible 1,194 (195) 4,617
Unrealized securities holding gain 3,105 2,752 7,970
- ------------------------------------------------------------------------------------------
U.S. income taxes - deferred $16,810 $10,802 $17,809
- ------------------------------------------------------------------------------------------
Overseas has unused net operating loss carryovers which expire as follows: (000s omitted)
Year
- ----
2006 $45,323
2007 $32,584
2008 $15,572
</TABLE>
Overseas also has alternative minimum tax credits which have no expiration date.
F-9
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
The components of deferred income taxes at December 31, 1997 and 1996 are as
follows: (000s omitted)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Benefit of operating loss carryovers $ 32,444 $ 37,392
Other accrued expenses not currently deductible 2,810 2,938
Other - net (1,081) (34)
- -------------------------------------------------------------------------------
Total deferred tax assets 34,173 40,296
- -------------------------------------------------------------------------------
Excess of tax over book depreciation 85,115 77,551
Unrealized securities holding gain 13,536 10,413
- -------------------------------------------------------------------------------
Total deferred tax liabilities 98,651 87,964
- -------------------------------------------------------------------------------
Net deferred taxes $ 64,478 $ 47,668
- -------------------------------------------------------------------------------
</TABLE>
3. INVESTMENTS
-----------
Investments consist of: (000s omitted)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Trading $1,762,755 $1,424,491
Held-to-maturity 59,082 54,194
- -------------------------------------------------------------------------------
$1,821,837 $1,478,685
- -------------------------------------------------------------------------------
</TABLE>
Held-to-maturity securities, which are comprised of zero coupon U.S. Treasury
notes, are carried at amortized cost and have an estimated fair value of $91.1
million at December 31, 1997 and $72.6 million at December 31, 1996.
Amortized cost and estimated fair value of investments in trading securities are
as follows: (000s omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
AMORTIZED COST UNREALIZED UNREALIZED ESTIMATED
GAINS LOSSES FAIR VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1997:
Short-term Investments $ 20,854 $ 846 $ (181) $ 21,519
Bonds 644,863 1,549 (4,410) 642,002
Equities 832,876 219,960 (41,548) 1,011,288
Real estate investment trust certificates 49,301 38,645 -- 87,946
- ------------------------------------------------------------------------------------------------------------------------
$1,547,894 $261,000 $ (46,139) $1,762,755
- ------------------------------------------------------------------------------------------------------------------------
December 31, 1996:
Short-term investments $ 25,333 $ 218 $ (99) $ 25,452
Bonds 532,657 2,012 (5,181) 529,488
Equities 675,030 134,758 (16,097) 793,691
Real estate investment trust certificates 47,104 28,756 -- 75,860
- ------------------------------------------------------------------------------------------------------------------------
$1,280,124 $165,744 $( 21,377) $1,424,491
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Included in net holding gain on trading securities of $187.1 million and $91.7
million in 1997 and 1996, were $104.4 million and $100.8 million of unrealized
holding gains, respectively.
The maturities of fixed income securities held-to-maturity at December 31,
1997, are in excess of ten years.
F-10
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Fair value of financial instruments is as follows:(000s omitted)
<TABLE>
<CAPTION>
1997 1996
----------------------------------------------------------------------------
CARRYING FAIR VALUE CARRYING FAIR VALUE
VALUE VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments: (Note 3)
U.S. dollar denominated $1,332,951 $1,364,963 $1,305,921 $1,324,307
Non-U.S. dollar denominated 488,886 488,886 172,764 172,764
- -------------------------------------------------------------------------------------------------------------
1,821,837 1,853,849 1,478,685 1,497,071
- -------------------------------------------------------------------------------------------------------------
Debt: (Note 7) 758,416 749,609 713,790 699,352
</TABLE>
5. REAL ESTATE AND LEASING
-----------------------
In November 1995, One Buckhead Plaza was purchased. In August of 1996, the
Atlanta Financial Center was acquired and in December 1996, the 333 West Wacker
building was purchased. Also in December, a two-third interest in the retail
center and office complex Copley Place was acquired. The purchase prices are
allocated to the various asset categories following independent appraisals.
The operating lease agreements require fixed annual minimum rentals and
variable additional rentals based upon usage for certain of the leases.
Variable additional rentals in 1997, 1996 and 1995 were $17.8 million, $18.9
million and $16.0 million, respectively. Total aggregate fixed minimum rentals
are as follows: (000s omitted)
<TABLE>
<CAPTION>
OPERATING FINANCE OFFICE
LEASES LEASES BUILDINGS TOTAL
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 $ 24,436 $ 5,157 $ 46,510 $ 76,103
1999 24,436 5,157 39,158 68,751
2000 24,436 5,157 27,865 57,458
2001 24,436 4,476 21,168 50,080
2002 24,436 4,248 16,373 45,057
After 2002 295,602 74,348 49,170 419,120
- ----------------------------------------------------------------------------
$417,782 $98,543 $200,244 $716,569
- ----------------------------------------------------------------------------
</TABLE>
F-11
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
Real estate and leasing assets consist of the following: (000s omitted)
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Operating Leases with UPS:
Boeing 757 aircraft $ 237,543 $ 237,543
Data processing facility 118,001 117,841
- -----------------------------------------------------------------------------------------
355,544 355,384
Accumulated depreciation (57,836) (49,243)
- -----------------------------------------------------------------------------------------
297,708 306,141
- -----------------------------------------------------------------------------------------
Finance leases:
Lease rents receivable 98,543 103,701
Estimated residual value 6,740 6,744
Unearned and deferred income (57,248) (61,244)
- -----------------------------------------------------------------------------------------
48,035 49,201
- -----------------------------------------------------------------------------------------
Hotel:
Building and improvements 152,076 152,076
Furniture, fixtures and equipment 17,940 14,605
Air rights, leasehold interest 18,128 18,128
- -----------------------------------------------------------------------------------------
188,144 184,809
Accumulated depreciation (20,811) (15,185)
- -----------------------------------------------------------------------------------------
167,333 169,624
- -----------------------------------------------------------------------------------------
Office buildings:
Building and improvements 617,714 596,084
Furniture, fixtures and equipment 3,938 3,961
Land 21,900 21,900
- -----------------------------------------------------------------------------------------
643,552 621,945
Accumulated depreciation (22,206) (3,788)
- -----------------------------------------------------------------------------------------
621,346 618,157
- -----------------------------------------------------------------------------------------
Total $1,134,422 $1,143,123
- -----------------------------------------------------------------------------------------
</TABLE>
6. ACCRUED LOSSES AND LOSS EXPENSES
--------------------------------
Activity in accrued losses and loss expenses is summarized as follows: (000s
omitted)
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, $ 265,166 $ 214,207 $ 219,311
- ----------------------------------------------------------------------------------------------------------------
Incurred related to:
Current year 318,807 233,919 184,535
Prior years 13,072 2,374 4,838
- ----------------------------------------------------------------------------------------------------------------
Total incurred 331,879 236,293 189,373
- ----------------------------------------------------------------------------------------------------------------
Paid related to:
Current year (120,788) (132,480) (104,681)
Prior years (130,802) (94,811) (75,836)
- ----------------------------------------------------------------------------------------------------------------
Total Paid (251,590) (227,291) (180,517)
- ----------------------------------------------------------------------------------------------------------------
Loss portfolio assumed -- 70,837 --
Amortization of life and annuity reserve - net (7,030) (28,880) (13,960)
- ----------------------------------------------------------------------------------------------------------------
Balance at December 31, $ 338,425 $ 265,166 $ 214,207
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
F-12
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
7. DEBT
----
In connection with the acquisition of real estate and leasing assets, Overseas
has issued or assumed certain debt obligations, as follows: (000s omitted)
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Leases:
9 7/8% Series A Bonds due 2012 $171,600 $171,600
9 7/8% Series B Bonds due 2019 73,400 73,400
- -----------------------------------------------------------------------------------------------------------
245,000 245,000
Unamortized discount (955) (1,011)
- -----------------------------------------------------------------------------------------------------------
244,045 243,989
- -----------------------------------------------------------------------------------------------------------
Finance leases:
7.53% non-recourse note through 2009 24,840 26,331
8.1% non-recourse note through 2012 10,070 10,070
- -----------------------------------------------------------------------------------------------------------
34,910 36,401
- -----------------------------------------------------------------------------------------------------------
Hotel:
8.39% non-recourse note due through 2006 107,396 109,272
- -----------------------------------------------------------------------------------------------------------
Office buildings:
7.246% non-recourse note due through 2005 33,930 34,484
7.8% non-recourse note due through 2006 78,947 79,644
8.5% non-recourse note due 1998 -- 210,000
7.44% non-recourse note due through 2007 194,409 --
7.57% non-recourse note due through 20012 64,779 --
- -----------------------------------------------------------------------------------------------------------
372,065 324,128
- -----------------------------------------------------------------------------------------------------------
Total debt $758,416 $713,790
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal payments under debt obligations are as follows: (000s omitted)
<S> <C>
1998 $ 7,788
1999 8,412
2000 9,088
2001 9,817
2002 10,606
Thereafter 713,660
- --------------------------------------------------
759,371
Unamortized discount (955)
- --------------------------------------------------
$758,416
========
</TABLE>
The right to receive fixed minimum rentals on the Boeing 757 aircraft and data
processing facility is used to collateralize and service the debt interest on
the Series A and Series B bonds. The principal of these bonds is guaranteed by
an OPL wholly-owned subsidiary, Overseas Partners Credit, Inc. Its obligations
are secured by zero-coupon U.S. Treasury notes owned by that subsidiary. On or
prior to the scheduled maturity of each series of the bonds, the U.S. Treasury
notes which secure the guarantee of that series will mature in an amount equal
to or exceeding the principal amount of that series.
F-13
<PAGE>
OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
================================================================================
8. COMMON STOCK
------------
OPL has the right of first refusal and the right to purchase its shares in
certain circumstances. Prior to August 7, 1996, these rights were enjoyed by
UPS. In 1997, 1996 and 1995, OPL purchased for cancellation, at book value per
share, four million, one million and three million shares, respectively, of its
common stock.
9. BUSINESS SEGMENTS
-----------------
Overseas is engaged in the reinsurance and real estate and leasing business.
All capital expenditures are associated with the real estate and leasing
business segment. Amortization of acquisition costs included in reinsurance
commissions, taxes and other for 1997, 1996 and 1995 were $72.2 million, $50.3
million and $37.3 million, respectively. Identifiable assets, revenues and
operating income are as follows: (000's omitted)
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Reinsurance $2,302,054 $1,864,360 $1,699,035
Real estate and leasing 1,365,615 1,327,809 720,276
- ---------------------------------------------------------------------------------------------------------------
Revenues:
Reinsurance premiums written 720,535 561,386 502,527
Reinsurance premiums ceded (451) (825) (1,875)
- ---------------------------------------------------------------------------------------------------------------
Net reinsurance premiums written 720,084 560,561 500,652
- ---------------------------------------------------------------------------------------------------------------
Real estate and leasing 247,940 150,741 125,450
- ---------------------------------------------------------------------------------------------------------------
Operating income:
Reinsurance 225,307 237,854 233,657
Real estate and leasing 25,210 12,060 6,579
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
10. THE BERMUDA INSURANCE REGULATIONS
---------------------------------
The Bermuda Insurance Act of 1978 and related regulations require OPL and OP Re
to each maintain a minimum solvency margin and a liquidity ratio. For the years
ended December 31, 1997 and 1996, OPL and OP Re each met these requirements.
11. COMPARATIVE FIGURES
-------------------
Certain prior year amounts have been reclassified to conform with current year
presentation.
F-14
<PAGE>
EXHIBITS
--------
TO
OVERSEAS PARTNERS LTD.
REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<S> <C>
(3) Articles of Incorporation and Bye-Laws.
3(a) Certificate of Incorporation Incorporated by Reference to Exhibit 3(a) to
Registration Statement (on Form S-1), No. 2-95460.
Bye-Laws as amended Incorporated by Reference to Exhibit 3(c) of
3(b) OPL's Annual Report on Form 10-K for the Year
Ended December 31, 1990.
(4) Instruments defining the rights of security holders, including indentures.
4(a) Copy of specimen stock certificate Incorporated by Reference to Exhibit 4(a)
Registration Statement (on Form S-1), No. 2-95460.
4(b) Agreement accepting restrictions on Incorporated by Reference to Exhibit 4(b) to
transfer and rights to purchase Registration Statement (on Form S-1), No. 2-95460.
executed by recipients of shares
4(c) Subscription Agreement Incorporated by Reference to Exhibit 4(c) to
Registration Statement (on Form S-1), No. 33-0009.
4(d) Subscription Agreement Incorporated by Reference to Exhibit 4(d) of OPL's
Annual Report on Form 10-K for the year ended
December 31, 1990.
(10) Material Contracts.
10(a) Facultative Reinsurance Agreement Incorporated by Reference to Exhibit 10(b) of OPL's
between OPL and Liberty Mutual Fire Registration Statement (on Form S-1) No. 2-95460.
Insurance Company and Amendments.
10(b) Facultative Reinsurance Agreement Incorporated by Reference to Exhibit 10(g) of OPL's
with New Hampshire Insurance Registration Statement (on Form S-2) No. 33-19672.
Company of Manchester, New
Hampshire.
10(c) Facultative Reinsurance Agreement Incorporated by Reference to Exhibit 10(a) to OPL's
among OPL and National Union Fire Post-Effective Amendment No. 1 to Registration
Insurance Company of Pittsburgh, PA Statement (on Form S-2) No. 33-30944.
and New Hampshire Insurance Company.
10(d) Facultative Reinsurance Agreement Incorporated by Reference to Exhibit 10(d) of OPL's
Federal Insurance Company. Registration Statement (on Form S-2) No. 33-43869.
10(e) Management Services Incorporated by Reference to Exhibit 10(c) of
</TABLE>
E-1
<PAGE>
<TABLE>
<S> <C> <C>
Agreement between OPL and Registration Statement (on Form S-1) No. 2-95460.
Rollins Hudig Hall (Bermuda) Ltd.
(successor to Parker & Co.
Interocean Ltd.)
10(f) Investment Management Agreement Incorporated by Reference to Exhibit 10(d) of
with Citibank N.A. Registration Statement (on Form S-1) No. 2-95460.
10(g) Investment Management Agreement Incorporated by Reference to Exhibit 10(e) of
with County Bank Limited. Amendment No. 1 to Registration Statement (on Form
S-1) No. 2-95460.
10(h) Investment Management Agreement Incorporated by Reference to Exhibit 10(f) of
with Morgan Grenfell & Co. Limited. Registration Statement (on Form S-2) No. 33-11379.
10(i) Aircraft Lease Agreement between Incorporated by Reference to Exhibit 10(f) of OPL's
OPCC, Inc. ("OPCC") and United Post-Effective Amendment No. 1 to Registration
Parcel Service Co. ("UPS Co.") Statement (on Form S-2) No. 33-30944.
dated May 31, 1990.
10(j) Aircraft Lease Agreement between Incorporated by Reference to Exhibit 10(g) of OPL's
OPCC and UPS Co. dated May 31, 1990. Post-Effective Amendment No. 1 to Registration
Statement (on Form S-2) No. 33-30944.
10(k) Aircraft Lease Agreement between Incorporated by Reference to Exhibit 10(h) of OPL's
OPCC and UPS Co. dated May 31, 1990. Post-Effective Amendment No. 1 to Registration
Statement (on Form S-2) No. 33-30944.
10(l) Aircraft Lease Agreement between Incorporated by Reference to Exhibit 10(i) of OPL's
OPCC and UPS Co. dated August 31, Post-Effective Amendment No. 1 to Registration
1990. Statement (on Form S-2) No. 33-30944.
10(m) Amended and Restated Aircraft Lease Incorporated by Reference to Exhibit 10(l) of OPL's
Agreement among OPCC, UPS Co. and Post-Effective Amendment No. 1 to Registration
United Parcel Service of America, Statement (on Form S-2) No. 33-30944.
Inc. ("UPS") dated November 6, 1990.
10(n) Purchase Agreement Assignment Incorporated by Reference to Exhibit 10(m) of OPL's
between OPCC, UPS Co. and UPS dated Form 10-K Annual Report for the Year ended December
December 28, 1989. 31, 1989.
10(o) Engine Support Contract Agreement Incorporated by Reference to Exhibit 10(n) of OPL's
between UPS Co. and OPCC dated Annual report on Form 10-K for the year ended
December 28, 1989. December 31, 1989.
10(p) Guaranty Agreement from OPL in Incorporated by Reference to Exhibit 10(m) of OPL's
favor of UPS Co. dated November 6, Post-Effective Amendment No. 1 to Registration
1990. Statement (on Form S-2) No. 33-30944.
</TABLE>
E-2
<PAGE>
<TABLE>
<S> <C> <C>
10(q) Instrument of Conveyance of Basic Incorporated by Reference to Exhibit 10(n) of OPL's
Tolls (Series A) among OPCC, UPS, Post-Effective Amendment No. 1 to Registration
UPS Co., Continental Bank, N.A., as Statement (on Form S-2) No. 33-30944.
Trustee ("Continental Bank") and
OPL Funding Corp. ("OPL Funding")
dated November 6, 1990.
10(r) Series A Loan Agreement and Note Incorporated by Reference to Exhibit 10(o) of OPL's
between OPL Funding and OPCC dated Post-Effective Amendment No. 1 to Registration
November 6, 1990. Statement (on Form S-2) No. 33-30944.
10(s) Security Agreement between OPL Incorporated by Reference to Exhibit 10(p) of OPL's
Funding and OPCC dated November 6, Post Effective Amendment No. 1 to Registration
1990. Statement (on Form S-2) No. 33-30944.
10(t) Amended and Restated Facility Lease Incorporated by Reference to Exhibit 10(s) of OPL's
Agreement among OPCC, United Parcel Post-Effective Amendment No. 1 to Registration
Service General Services Co., Statement (on Form S-2) No. 33-30944.
("GSC") and UPS dated November 6,
1990.
</TABLE>
E-3
<PAGE>
<TABLE>
<S> <C> <C>
10(u) Agreement of Sale between Edison Incorporated by Reference to Exhibit 10(p) of OPL's
Corp. and OPCC dated December 28, Annual Report on Form 10-K for the year ended
1989. December 31, 1989.
10(v) Assignment and Assumption Agreement Incorporated by Reference to Exhibit 10(q) of OPL's
among Edison Corp., OPCC, McBride Annual Report on Form 10-K for the year ended
Enterprises, Inc. and Ramapo December 31, 1989.
Ridge-McBride Office Park dated
December 28, 1989.
10(w) Guaranty Agreement from OPL in Incorporated by Reference to Exhibit 10(t) of OPL's
favor of GSC dated November 6, 1990. Post-Effective Amendment No. 1 to Registration
Statement (on Form S-2) No. 33-30944.
10(x) Instrument of Conveyance of Basic Incorporated by Reference to Exhibit 10(u) of OPL's
Tolls (Series B) among OPCC, UPS, Post-Effective Amendment No. 1 to Registration
UPS Co., Continental Bank and OPL Statement (on Form S-2) No. 33-30944.
Funding dated November 6, 1990.
10(y) Series B Loan Agreement and Note Incorporated by Reference to Exhibit 10(v) of OPL's
between OPL Funding and OPCC dated Post-Effective Amendment No. 1 to Registration
November 6, 1990. Statement (on Form S-2) No. 33-30944.
10(z) Mortgage and Security Agreement Incorporated by Reference to Exhibit 10(w) of OPL's
between OPL Funding and OPCC dated Post-Effective Amendment No. 1 to Registration
November 6, 1990. Statement (on Form S-2) No. 33-30944.
10(aa) Amended and Restated Trust Incorporated by Reference to Exhibit 10(x) of OPL's
Indenture and Security Agreement Post-Effective Amendment No. 1 to Registration
among OPL Funding, Overseas Statement (on Form S-2) No. 33-30944.
Partners Credit, Inc. ("OPL
Credit") and Continental Bank N.A.
as trustee, dated November 6, 1990.
10(bb) Bond Purchase Agreement among OPL Incorporated by Reference to Exhibit 10(y) of OPL's
Funding, UPS, OPL and Salomon Post-Effective Amendment No. 1 to Registration
Brothers Inc. dated November 6, Statement (on Form S-2) No. 33-30944.
1990.
10(cc) Letter Agreement from OPL Funding, Incorporated by Reference to Exhibit 10(z) of OPL's
UPS and OPL to each Purchaser of Post-Effective Amendment No. 1 to Registration
the Bonds dated November 9, 1990. Statement (on Form S-2) No. 33-30944.
</TABLE>
E-4
<PAGE>
<TABLE>
<S> <C> <C>
10(dd) Indemnification Agreement among Incorporated by Reference to Exhibit 10(aa) of OPL's
OPL, OPL Funding, OPCC and Post-Effective Amendment No. 1 to Registration
Continental Bank N.A., as Trustee, Statement (on Form S-2) No. 33-30944.
dated November 6, 1990.
10(ee) Investment Management Agreement Incorporated by Reference to Exhibit 10(ee) of OPL's
with Rothschild Asset Management Annual Report on Form 10-K for the Year Ended
Limited December 31, 1992.
10(ff) Insurance Underwriting Adviser Incorporated by Reference to Exhibit 10(ff) of OPL's
Agreement between OPL and Lincoln Annual Report on Form 10-K for the Year Ended
National Intermediaries, Inc. December 31, 1992.
dated September 3, 1993.
10(gg) Agreement dated as of December 22, Incorporated by Reference to Exhibit 99.1 of OPL's
1993, among Host Marriott Current Report on Form 8-K dated January 12, 1994.
Corporation, Urban Investment and
Development Co. and OPCC.
10(hh) Agreement dated as of December 31, Incorporated by Reference to Exhibit 99.2 of OPL's
1993, between Mascester Company Current Report on Form 8-K dated January 12, 1994.
and OPCC.
10(ii) Amendment dated December 31, 1993 Incorporated by Reference to Exhibit 10 (ll) of OPL's
to Aircraft Lease Agreement Annual Report on Form 10-K for the Year Ended
between OPCC and UPS Co. dated May December 31, 1993.
31, 1990.
10(jj) Term Loan Agreement dated as of Incorporated by Reference to Exhibit 10 (ll) of OPL's
December 30, 1994 between Bank of Annual Report on Form 10-K for the Year Ended
America Illinois and Marriott December 31, 1994.
Urban Boston Venture ("MUBV").
10(kk) Guaranty dated as of December 30, Incorporated by Reference to Exhibit 10 (ll) of OPL's
1994 of OPCC. Annual Report on Form 10-K for the Year Ended
December 31, 1994
10(ll) Guaranty dated as of December 30, Incorporated by Reference to Exhibit 10 (ll) of OPL's
1994 of OPL. Annual Report on Form 10-K for the Year Ended
December 31, 1994
10(mm) Investment Management Agreement Incorporated by Reference to Exhibit 10 (ll) of OPL's
with INVESCO Asset Management Annual Report on Form 10-K for the Year Ended
Limited. December 31, 1994
10(nn) Investment Management Agreement Incorporated by Reference to Exhibit 10 (ll) of OPL's
with Barings International Annual Report on Form 10-K for the Year Ended
Investment Management Limited. December 31, 1994
</TABLE>
E-5
<PAGE>
<TABLE>
<S> <C> <C>
10(oo) OPCC 1995 Stock Appreciation Rights Incorporated by Reference to Exhibit 10 (ll) of OPL's
Plan. Annual Report on Form 10-K for the Year Ended
December 31, 1994
10(pp) Purchase and Sale Agreement Incorporated by Reference to Exhibit 10 (pp) of
between OPCC and The Mutual Life OPL's Annual Report on Form 10-K for the Year Ended
Insurance Company of New York December 31, 1996
dated August 9, 1996.
10(qq) Bill of Sale and Assignment by and Incorporated by Reference to Exhibit 10 (qq) of
between The Mutual Life Insurance OPL's Annual Report on Form 10-K for the Year Ended
Company of New York and Overseas December 31, 1996
Partners (AFC), Inc. dated August
30, 1996.
10(rr) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (rr) of
Leases by and between The Mutual OPL's Annual Report on Form 10-K for the Year Ended
Life Insurance Company of New York December 31, 1996
and Overseas Partners (AFC), Inc.
dated August 30, 1996.
10(ss) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (ss) of
Contracts by and between The OPL's Annual Report on Form 10-K for the Year Ended
Mutual Life Insurance Company of December 31, 1996
New York and Overseas Partners
(AFC), Inc. dated August 30, 1996.
10(tt) Promissory Note from Overseas Incorporated by Reference to Exhibit 10 (tt) of
Partners (AFC), Inc. to The Mutual OPL's Annual Report on Form 10-K for the Year Ended
Life Insurance Company of New York December 31, 1996
dated October 23, 1996.
</TABLE>
E-6
<PAGE>
<TABLE>
<S> <C> <C>
10(uu) Deed to Secure Debt, Assignment of Incorporated by Reference to Exhibit 10 (uu) of
Leases and Rents and Security OPL's Annual Report on Form 10-K for the Year
Agreement from Overseas Partners Ended December 31, 1996
(AFC), Inc. to The Mutual Life
Insurance Company of New York
dated October 23, 1996.
10(vv) Reserve Account Agreement from Incorporated by Reference to Exhibit 10 (vv) of
Overseas Partners (AFC), Inc. and OPL's Annual Report on Form 10-K for the Year
The Mutual Life Insurance Company Ended December 31, 1996
of New York dated
October 23, 1996.
10(ww) Side Letter Agreement Waiving Tax Incorporated by Reference to Exhibit 10 (ww) of
and Insurance Deposits from The OPL's Annual Report on Form 10-K for the Year
Mutual Life Insurance Company of Ended December 31, 1996
New York to Overseas Partners
(AFC), Inc. dated October 23,
1996.
10(xx) Side Letter Agreement Regarding Incorporated by Reference to Exhibit 10 (xx) of
Audit Certification from The OPL's Annual Report on Form 10-K for the Year
Mutual Life Insurance Company of Ended December 31, 1996
New York to Overseas Partners
(AFC), Inc. dated October 23,
1996.
10(yy) One Time Transfer Letter from The Incorporated by Reference to Exhibit 10 (yy) of
Mutual Life Insurance Company of OPL's Annual Report on Form 10-K for the Year
New York to Overseas Partners Ended December 31, 1996
(AFC), Inc. dated October 23,
1996.
10(zz) Guarantee of Payment Related to Incorporated by Reference to Exhibit 10 (zz) of
Leasing between The Mutual Life OPL's Annual Report on Form 10-K for the Year
Insurance Company of New York to Ended December 31, 1996
Overseas Partners (AFC), Inc.
dated October 23, 1996.
10(aaa) Purchase and Sale Agreement Incorporated by Reference to Exhibit 10 (aaa) of
between OPCC and 333 Wacker OPL's Annual Report on Form 10-K for the Year
Drive Limited Partnership dated Ended December 31, 1996
December 24, 1996.
</TABLE>
E-7
<PAGE>
<TABLE>
<S> <C> <C>
10(bbb) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (bbb) of
Leases between Overseas Partners OPL's Annual Report on Form 10-K for the Year
(333), Inc. and 333 Wacker Drive Ended December 31, 1996
Limited Partnership dated
December 31, 1996.
10(ccc) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (ccc) of
Contracts between Overseas OPL's Annual Report on Form 10-K for the Year
Partners (333), Inc. and 333 Ended December 31, 1996
Wacker Drive Limited Partnership
dated December 31, 1996.
10(ddd) Bill of Sale and Assignment by 333 Incorporated by Reference to Exhibit 10 (ddd) of
Wacker Drive Limited Partnership OPL's Annual Report on Form 10-K for the Year
for benefit of Overseas Partners Ended December 31, 1996
(333), Inc. dated December 31,
1996.
10(eee) Purchase and Sale Agreement by and Incorporated by Reference to Exhibit 10 (eee) of
among JMB Realty Corporation, OPL's Annual Report on Form 10-K for the Year
Carlyle Real Estate Limited Ended December 31, 1996
Partnership - XIII, Urban
Investment and Development Co.
and OPCC dated December 31, 1996.
10(fff) First Amendment to Purchase and Incorporated by Reference to Exhibit 10 (fff) of
Sale Agreement by and among JMB OPL's Annual Report on Form 10-K for the Year
Realty Corporation, Carlyle Real Ended December 31, 1996
Estate Limited Partnership - XIII,
Urban Investment and Development
Co. and OPCC dated January 23,
1997.
10(ggg) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (ggg) of
Membership Interest by JMB Realty OPL's Annual Report on Form 10-K for the Year
Corporation to OPCC dated Ended December 31, 1996
January 23, 1997.
10(hhh) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (hhh) of
Membership Interest by Urban OPL's Annual Report on Form 10-K for the Year
Investment and Development Co. to Ended December 31, 1996
OPCC dated January 23, 1997.
</TABLE>
E-8
<PAGE>
<TABLE>
<S> <C> <C>
10(iii) Assignment and Assumption of Incorporated by Reference to Exhibit 10 (iii) of
Membership Interest by Carlyle OPL's Annual Report on Form 10-K for the Year
Real Estate Limited Partnership - Ended December 31, 1996
XIII to OPCC dated January 23,
1997.
10(jjj) Confirmatory Assumption and Incorporated by Reference to Exhibit 10 (jjj) of
Reaffirmation Agreement by and OPL's Annual Report on Form 10-K for the Year
among Copley Place Associates, Ended December 31, 1996
LLC, Copley Place Associates
Nominee Corporation, Copley
Funding Corporation, Copley
Financing Corporation and The
Aetna Casualty and Surety Company
dated January 23, 1997.
10(kkk) Certificate of Borrower dated Incorporated by Reference to Exhibit 10 (kkk) of
January 23, 1997. OPL's Annual Report on Form 10-K for the Year
Ended December 31, 1996
10(lll) Central Area Bill of Sale, Incorporated by Reference to Exhibit 10 (lll) of
Assignment and Assumption OPL's Annual Report on Form 10-K for the Year
Agreement by JMB Realty Ended December 31, 1996
Corporation, Carlyle Real Estate
Limited Partnership - XIII, Urban
Investment and Development Co. to
Copley Place Associates LLC dated
January 23, 1997.
10(mmm) Amended and Restated Limited Incorporated by Reference to Exhibit 10 (mmm) of
Liability Company Agreement of OPL's Annual Report on Form 10-K for the Year
Copley Place Associates, LLC dated Ended December 31, 1996
January 23, 1997.
10(nnn) Agreement of Merger between Copley Incorporated by Reference to Exhibit 10 (nnn) of
Place Associates and Copley Place OPL's Annual Report on Form 10-K for the Year
Associates, LLC dated Ended December 31, 1996
dated January 23, 1997.
10(ooo) Management Agreement by and Incorporated by Reference to Exhibit 10 (ooo) of
between Copley Place Associates, OPL's Annual Report on Form 10-K for the Year
LLC and Overseas Management, Inc. Ended December 31, 1996
dated January 23, 1997.
</TABLE>
E-9
<PAGE>
<TABLE>
<S> <C> <C>
10(ppp) Management and Leasing Fee Incorporated by Reference to Exhibit 10 (ppp) of
Subordination Agreement by and OPL's Annual Report on Form 10-K for the Year
among Copley Place Associates, Ended December 31, 1996
LLC, Copley Funding Corporation,
Copley Financing Corporation, The
Aetna Casualty and Surety Company
and Overseas Management, Inc.
dated January 23, 1997.
10(qqq) Agreement for Purchase of Incorporated by Reference to Exhibit 10 (qqq) of
Consulting and Other Services by OPL's Annual Report on Form 10-K for the Year
and between Overseas Management, Ended December 31, 1996
Inc. and Urban Retail Property Co.
dated January 23, 1997.
10(rrr) Consulting Subordination Agreement Incorporated by Reference to Exhibit 10 (rrr) of
by and among Copley Place OPL's Annual Report on Form 10-K for the Year
Associates, LLC, Copley Funding Ended December 31, 1996
Corporation, Copley Financing
Corporation, The Aetna Casualty
and Surety Company and Urban
Retail Properties Co. dated
January 23, 1997.
10(sss) Class A Promissory Note from Filed herewith.
Copley Place Associates, LLC and
Urban Investment and
Development Co. to the
Metropolitan Life Insurance
Company dated July 30, 1997.
10(ttt) Class B Promissory Note from Filed herewith.
Copley Place Associates, LLC and
Urban Investment and
Development Co. to the
Metropolitan Life Insurance
Company dated July 30, 1997.
10(uuu) Leasehold Mortgage, Security Filed herewith.
Agreement and Fixture Financing
Statement by Copley Place
Associates, LLC and Urban
Investment and Development Co. to
Metropolitan Life Insurance
Company dated July 30, 1997.
10(vvv) Assignment of Lessor's Interest in Filed herewith.
Leases by Copley Place Associates,
LLC to Metropolitan Life Insurance
</TABLE>
E-10
<PAGE>
<TABLE>
<S> <C>
Company dated July 30, 1997.
10(www) Collateral Assignment and Security Filed herewith.
Agreement in regard to Contracts,
Licenses, Permits, Agreements,
Warranties and Approvals, to
Metropolitan Life Insurance
Company dated July 30, 1997.
10(xxx) Guaranty Agreement made by Filed herewith.
Overseas Partners Capital Corp.
and JMB Realty Corporation in
favor of Metropolitan Life
Insurance Company dated July 30,
1997.
10(yyy) Second Amended and Restated Filed herewith.
Limited Liability Company
Agreement of Copley Place
Associates, LLC by Overseas
Partners Capital Corp., JMB Realty
Corporation and Copley Place
Corp., Inc. dated July 30, 1997.
10(zzz) Notice of Direct Lease by Copley Filed herewith.
Place Associates, LLC to Urban
Investment and Development Co. and
Massachusetts Turnpike
Authority dated July 30, 1997.
10(aaaa) Confirmation of Direct Lease and Filed herewith.
Leasehold Mortgage by Copley
Place Associates, LLC, Urban
Investment and Development Co.
and Metropolitan Life Insurance
Company dated July 30, 1997.
</TABLE>
E-11
<PAGE>
<TABLE>
<S> <C> <C>
10(bbbb) Second Amendment to Amended and Filed herewith.
Restated Facility Lease Agreement
among Overseas Partners Leasing,
Inc., United Parcel Services
General Services Co. and United
Parcel Service of America, Inc.
Affecting 340 MacArthur Boulevard.
10(cccc) Mortgage, Security Agreement and Filed herewith.
Fixture Filing by Overseas
Partners (333), Inc. and The
Prudential Insurance Company of
America, Inc. dated August 27,
1997.
10(dddd) Promissory Note from Overseas Filed herewith.
Partners (333), Inc. to The
Prudential Insurance Company of
America, Inc. dated August 28,
1997.
10(eeee) Dartmouth Street Garage Assignment Filed herewith.
and Assumption of Ground Lease by
and between Urban Investment and
Development Co. and Copley Place
Associates, LLC dated January 23,
1997.
10(ffff) Assignment of Agreements by Filed herewith.
Overseas Partners (333), Inc. to
The Prudential Insurance Company
of America, Inc. dated August 28,
1997.
10(gggg) Assignment of Leases and Rents by Filed herewith.
and from Overseas Partners (333),
Inc. to The Prudential Insurance
Company of America, Inc. dated
August 27, 1997.
10(hhhh) The Overseas Partners Ltd. and Filed herewith.
Subsidiaries Retirement Plan As
Amended and Restated Generally
Effective January 1, 1997
</TABLE>
E-12
<PAGE>
<TABLE>
<S> <C> <C>
10(iiii) Agreement of General Partnership Filed herewith.
of OPL Group Investment
Partnership dated as of December
1, 1997.
(21) Subsidiaries. Filed herewith.
(23) Consent of Deloitte & Touche. Filed herewith.
(99) Additional Exhibits.
99(a) UPS Custody Arrangements for Incorporated by Reference to Exhibit 28(c) of OPL's
OPLCommon Stock. Registration Statement (on Form S-1) No. 2-95460.
Incorporated by Reference to OPL's Proxy statement
99(b) Amendment to OPL's Bye- filed July 3, 1996.
laws.
99(c) OPL's Specimen Stock. Incorporated by Reference to Exhibit 99 (c) of OPL's
Certificate. Annual Report on Form 10-K for the Year Ended
December 31, 1996
</TABLE>
E-13
<PAGE>
Exhibit 10 (sss)
<PAGE>
CLASS A PROMISSORY NOTE
$97,500,000.00 July 30, 1997
New York, New York
FOR VALUE RECEIVED, COPLEY PLACE ASSOCIATES, LLC (together with its
successors and assigns, "Copley"), a Delaware limited liability company, having
its principal place of business c/o Overseas Partners Capital Corp., 115
Perimeter Center Place, Suite 940, Atlanta, Georgia 30346 and URBAN INVESTMENT
AND DEVELOPMENT CO. ("UIDC"), an Illinois general partnership, having an office
at 900 North Michigan Avenue, Chicago, Illinois 60611 (Copley and UIIDC being
referred to collectively herein as "Maker") promise to pay to the order of
METROPOLITAN LIFE INSURANCE COMPANY ("Holder"), a New York corporation, at its
principal place of business at One Madison Avenue, New York, New York 10010, or
such other place as Holder may from time to time designate, the principal sum of
NINETY-SEVEN MILLION FIVE HUNDRED THOUSAND and N01100 DOLLARS ($97,500,000.00)
with interest, as specified below, in lawful money of the United States of
America, which shall be legal tender in payment of all debts and dues, public
and private, at the time of payment.
This Note evidences a portion of a loan (the "Loan") in the aggregate
-------
principal sum of One Hundred Ninety-Five Million and No/100 Dollars
($195,000,000.00), the other portion of which Loan is evidenced by a Class B
Promissory Note (the "Class B Note") in the principal sum of Ninety-Seven
---------------
Million Five Hundred Thousand and No/100 Dollars ($97,500,000.00) dated the date
of this Note made by Maker to Holder. This Note, together with the Class B
Note, are collectively referred to as the "Notes".
-------
1. Payment of Principal and Interest. Commencing on the first day of
---------------------------------
the second (2nd) calendar month next succeeding the Advance Date (hereinafter
defined) and on the first day of each and every calendar month thereafter, to
and including, the first day of July, 2007 (each a "Payment Date"), there shall
be due and payable under the Notes equal monthly installments of principal and
interest on the outstanding principal of the Loan at the rate of seven and
44/100ths percent (7.44%) per annum (the "Loan Interest Rate"), each in the
aggregate amount of One Million Three Hundred Fifty-Five Thousand Four Hundred
SixtyFive and 67/100 DOLLARS ($1,355,465.67) (the "Monthly Payment Amount"),
based upon an amortization period of thirty (30) years. Maker hereby
acknowledges and agrees that a substantial portion of the original principal sum
evidenced by the Notes shall be outstanding and due on the Maturity Date (as
hereinafter defined). Such final payment of the unpaid principal balance of the
Loan, together with all remaining accrued and unpaid interest thereon, and all
other sums then outstanding evidenced by the Notes or secured by the Mortgage
----
(as hereinafter defined) or evidenced or secured by any other instrument
collateral, incidental or related thereto (the Notes, the Mortgage and any and
all other documents evidencing, securing or relating to the Loan, and all
renewals, modifications, consolidations and extensions of such
<PAGE>
documents being herein collectively referred to as the "Loan Documents"), shall
be immediately due and payable in full on such Maturity Date.
Interest on the principal sum evidenced by this Note shall accrue from
the date hereof (the "Advance Date") at the rate of six and 75/100ths percent
(6.75%) per annum (the "Class A Interest Rate").
Interest shall be calculated on the basis of a thirty (30) day month,
and a three hundred sixty (360) day year; provided, however, that the
calculation of interest under Sections 2(a)(i) , shall be done on the basis of
the actual number of days in such months that the Loan is outstanding and a 365-
day or 366-day year, as applicable.
2. Application of Payments (a) Unless an Event of Default (as defined
-----------------------
in the Mortgage) shall have occurred and be continuing, principal and interest
under this Note shall be payable as follows:
(i) Interest accruing from the Advance Date to and including the last
day of the calendar month in which the Advance Date occurs shall be paid on the
first day of the calendar month next succeeding the Advance Date;
(ii) Commencing on the first day of the second (2nd) calendar month
next succeeding the Advance Date and on the first day of each and every calendar
month thereafter, until the entire principal sum of this Note and all accrued
interest thereon has been repaid in full, to monthly installments of principal
and interest payable under this Note at the Class A Interest Rate in an amount
equal to the Monthly Payment Amount minus the amount of scheduled interest
payments due on such date in respect of the Class B Note.
(iii) On August 1, 2007 (the 'Maturity Date"), unless sooner paid in
full, a final payment in the aggregate amount of the unpaid principal sum
evidenced by this Note, all accrued and unpaid interest thereon, and all other
sums evidenced by this Note, shall become immediately due and payable in full.
(b) If an Event of Default under the Mortgage shall have occurred and
be continuing, all amounts tendered by the Maker or otherwise available for
payment of the Loan shall be applied, in the following order of priority:
(i) and unpaid Class A-1 Strip Interest (as defined in the
Class B to accrued Note) under the Class B Note and to
accrued and unpaid Class B Strip Interest (as defined in
the Class B Note) under the Class B Note, pro rata in
accordance with the amounts of such interest that is
accrued and unpaid;
(ii) to accrued and unpaid interest on this Note at the Class A
Interest Rate;
(iii) to the principal of this Note until such principal has been
paid in full;
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<PAGE>
(iv) to accrued and unpaid interest due under the Class B Note
at the Class B Interest Rate (as defined in the Class B
Note) under such Class B Note and to accrued and unpaid
Class A-2 Strip Interest (as defined in the Class B Note)
under the Class B Note;
(v) to the principal of the Class B Note until such principal
has been paid in full;
(vi) to any Note Prepayment Fee or Default Prepayment Fee on
this Note and the Class B Note, in that order;
(vii) to any default interest in excess of the interest paid in
accordance with clauses (i) and (iii) above on this Note
and the Class B Note, in that order;
(viii) to late charges (applied to the Notes depending on the
proportion of the related late payment applicable to each
Note); and
(ix) to any other amounts payable under the Mortgage or any of
the other Loan Documents.
3. Security. This Note is secured by, among other things, that
--------
certain Leasehold Mortgage, Security Agreement and Fixture Financing Statement
of even date herewith (the "Mortgage"; which term includes all renewals,
modifications, consolidations and/or extensions thereof) granted by Maker to
Holder. Each capitalized term used herein, unless otherwise defined herein,
shall have the same meaning as set forth in the Mortgage. The obligations,
covenants and agreements of the Mortgage are hereby made a part of this Note to
the same extent and with the same effect as if they were fully set forth herein,
and Maker does hereby agree to perform and keep each and every obligation,
covenant and agreement set forth in this Note and in the other Loan Documents,
subject to applicable notice and cure provisions, if any, in the Loan Documents.
This Note shall evidence, the indebtedness described herein, any future loans or
advances that may be made to or on behalf of Maker by Holder at any time or
times hereafter under the Mortgage, and allocable by Holder to this Note and any
other amounts required to be paid by Maker under the Loan Documents and
allocable by Holder to this Note, and any such loans, advances or amounts shall
be added to the indebtedness evidenced by this Note, and shall bear interest at
the Loan Interest Rate unless a greater rate is expressly provided for in this
Note or the other Loan Documents. The Mortgage shall secure among other things,
all the indebtedness described herein and in the Class B Note, any future loans
or advances that may be made to or on behalf of Maker by Holder at any time or
times hereafter under the Mortgage, and any other amounts required to be paid by
Maker under the Loan Documents.
4. Late Charge. In the event that any installment of interest,
-----------
principal, principal and interest or required escrow deposits shall become
overdue for a period in excess of seven (7) days, a "late charge" of four cents
($.04) for each dollar ($1.00), or part thereof, so overdue may be charged to
Maker by Holder for the purpose of defraying the expenses
-3-
<PAGE>
incident to handling such delinquent payment. This charge shall be in addition
to, and not in lieu of, any other remedy Holder may have and is in addition to
Holder's right to collect reasonable fees and charges of any agents or attorneys
which Holder employs in connection with any Event of Default. Such late charges
if not previously paid shall become part of the indebtedness evidenced hereby,
and shall, at the option of Holder, be added to any succeeding monthly payment
due under the Loan Documents. Failure to pay such late charges with such
succeeding monthly payment shall constitute an Event of Default and such late
charges shall bear interest at the Default Rate from the date due.
5. Acceleration Upon an Event of Default. It is hereby expressly
agreed that upon the failure of Maker to pay any sum herein specified when due
(after giving effect to applicable notice and cure periods, if any), or upon the
occurrence of any other Event of Default, the unpaid principal sum evidenced by
this Note, all accrued and unpaid interest thereon, and all other sums evidenced
and/or secured by the Loan Documents shall, at the option of Holder, become
immediately due and payable, and payment of the unpaid principal sum evidenced
by this Note, all accrued and unpaid interest thereon, and all other sums
evidenced or secured by the Loan Documents, may be enforced and recovered at
once.
6. Interest on an Event of Default. Upon the occurrence of an Event of
Default (including, without limitation, the failure of Maker to pay any sum
herein specified when due, after giving effect to applicable notice and cure
periods, if any), the unpaid principal sum evidenced by this Note, all accrued
and unpaid interest thereon, and all other sums evidenced and/or secured by the
Loan Documents and allocable by Holder to this Note shall bear interest at a
rate per annum (the "Default Rate") equal to the lesser of: (i) the highest rate
of interest permitted to be contracted for under the laws of the Commonwealth of
Massachusetts (the "State"), or (ii) four percent (4%) per annum above the Loan
Interest Rate. The Default Rate shall be in lieu of any other interest rate
otherwise applicable and shall commence, without notice, immediately upon and
from the occurrence of such Event of Default and shall continue until all
defaults are cured and all sums, if any, then due and payable under the Loan
Documents are paid in full.
7. Limitation on Interest. All agreements made by Maker relating
directly or indirectly to the indebtedness evidenced by this Note and the other
Loan Documents are expressly limited so that in no event or contingency
whatsoever shall the amount of interest received, charged or contracted for by
Holder exceed the highest lawful amount of interest permissible under the laws
of the State. If, under any circumstances whatsoever, performance of any
provision of this Note or the other Loan Documents, at the time performance of
such provision shall be due, shall result in the highest lawful rate of interest
permissible under the laws of the State being exceeded, then ipso facto, the
amount of interest received, charged or contracted for by Holder shall be
reduced to the highest lawful amount of interest permissible under the laws of
the State, and if for any reason whatsoever, Holder shall ever receive, charge
or contract for, as interest, an amount which would be deemed unlawful, such
interest shall, at the option of Holder, be refunded to Maker (if theretofore
paid) or applied to the payment of the last maturing installment or installments
of principal to be paid on this Note (whether or not due and payable) and not to
the payment of interest. Without limitation of the
-4-
<PAGE>
foregoing, any amounts contracted for, charged or received under the Loan
Documents relating directly or indirectly to the indebtedness evidenced by this
Note, included for the purpose of determining whether the interest rate would
exceed the highest lawful rate, shall be calculated, to the extent permitted by
the laws of the State, by amortizing, prorating, allocating and spreading such
interest over the period of the full stated term of this Note.
8. Prepayment privilege. The principal sum evidenced by this Note
may not be prepaid, in whole or 'in part, at any time during the term hereof
except as set forth in this Section 8 or as required by Holder pursuant to
Sections 1.04, 1.07 or 1.08 of the Mortgage (it being agreed that any such
payment required by Holder under Sections 1.04, 1.07 and 1.08 of the Mortgage,
as aforesaid, shall not be considered a prepayment for purposes of this Section
8 or Section 9, below, and, notwithstanding anything to the contrary herein
contained, no Note Prepayment Fee or Default Prepayment Fee shall be due and
payable in connection therewith). Maker shall have the right to prepay the
entire principal sum evidenced by the Notes collectively and secured by the
Mortgage (but not a part of said indebtedness) together with all accrued and
unpaid interest thereon and all other sums payable under the Notes, the
Mortgage, and the other Loan Documents provided that: (i) all monthly
installment payments due on or before the date of prepayment have been paid in
full; (ii) Holder and the holder of the Class B Note have received a written
notice of prepayment, which notice shall specify an estimated date of prepayment
no less dm sixty (60) days subsequent to such holder's receipt of such notice,
provided that in the event that Maker shall give such notice and then revoke
such notice three times in any one calendar year, then the fourth such notice in
such calendar year shall be irrevocable; (iii) Holder and the holder of the
Class B Note have received ten business days written notice of the actual date
of prepayment, which shall be no earlier than the estimated date of prepayment
and shall at all times be on a Payment Date, and which notice once received by
Holder shall be irrevocable notwithstanding the provisions of clause (ii) above;
and (iv) the Note Prepayment Fee (as hereinafter defined) is paid by Maker to
Holder and the holder of the Class B Note on the date of prepayment. Maker
agrees that Holder shall have no obligation to accept any prepayment of the
principal sum evidenced by this Note except as expressly stated in this Section.
In the event any partial prepayment of the Loan is required pursuant to
Sections 1.04, 1.07 or 1.08 of the Mortgage, any principal amount prepaid shall,
if no Event of Default shall have occurred and be continuing, be applied first
to the payment of any Class A-1 Strip Interest and Class B Strip Interest
payable under the Class B Note through the next Payment Date, pro rata in
accordance with the amounts of such interest that is payable, next to the
payment of any interest payable under this Note through the next Payment Date,
next, to the payment of the principal amount outstanding under this Note, next,
to the payment of any Class A-2 Interest and any interest on the outstanding
principal balance of the Class B Note at the Class B Interest Rate payable under
the Class B Note through the next Payment Date, and the balance, if any, to the
payment of the principal amount outstanding under the Class B Note. Without in
any way affecting the rights or obligations of any parties to this Note, and for
illustrative purposes only, attached hereto as Exhibit A is an example of how
payments under the Loan would be applied in the event of such a partial
prepayment. If an Event of
-5-
<PAGE>
Default shall have occurred and be continuing, any amount so prepaid shall be
applied in accordance with the provisions of Section 2(b) hereof.
For purposes hereof, the term "Note Prepayment Fee" shall mean the
difference between (i) the present value of all remaining payments of principal
and interest including without limitation, the outstanding principal due on the
Maturity Date, discounted at the rate which, when adjusted for a monthly payment
interval, is equivalent to the Enhanced Treasury Rate (as hereinafter defined);
and (ii) the amount of principal being prepaid. In no event, however, shall the
Note Prepayment Fee be less than zero dollars ($0.00). For purposes of computing
the Note Prepayment Fee, the term "Enhanced Treasury Rate, shall mean the sum of
(i) fifty (50) basis points; and (ii) the Treasury Rate (as hereinafter
defined). For purposes of computing the Enhanced Treasury Rate, the term
"Treasury Rate" shall mean the bond equivalent yield on securities issued by the
United States Treasury having a maturity equal to the remaining term of the Loan
evidenced hereby, as quoted in Federal Reserve Statistical Release H.15 (519)
----------
under the heading "U.S. Government Securities-Treasury Constant Maturity" for
the date on which prepayment is being made. If this rate is not available as of
the date of prepayment, the Treasury Rate shall be determined by interpolating
between the yield on securities of the next longer and next shorter maturity. If
the Treasury Rate is no longer published, Holder shall reasonably select a
comparable rate. Holder will, upon request, provide an estimate of the amount of
the Note Prepayment Fee two weeks before the date of the scheduled prepayment.
9. Default Prepayment Fee. Maker agrees that any tender of payment
----------------------
by Maker or any other party of the principal sum evidenced by this Note, other
than as expressly set forth in Section 8 of this Note or as provided for in
Sections 1.04, 1.07 or 1.08 of the Mortgage, shall constitute a prohibited
prepayment hereunder. Maker further agrees that should: (I) any default be made
in the payment of any amount due under this Note, or any other Event of Default
have occurred and (ii) the maturity hereof be accelerated, then a tender of
payment by Maker, or by any entity controlling, controlled by or under common
control with, Maker or by anyone on behalf of Maker, of the amount necessary to
satisfy all sums due under the Loan Documents (including, without limitation, -
any sums due on any judgment rendered in any foreclosure action, or any amounts
necessary to redeem the property) made at any time prior to, during, or after, a
judicial foreclosure or a sale pursuant to the exercise of a power of sale of
the Property, shall constitute an evasion of the payment terms hereof and shall
be deemed to be a prohibited prepayment hereunder. Maker acknowledges that
Holder has relied upon the anticipated investment return under this Note in
entering into transactions with, and in making commitments to, third parties;
therefore, the tender of any prohibited prepayment, shall, to the extent
permitted by law, include a "Default Prepayment Fee," equal to the Note
Prepayment Fee. Maker agrees that the Default Prepayment Fee represents the
reasonable estimate of Holder and Maker of a fair average compensation for the
loss that may be sustained by Holder due to the prohibited prepayment of the
indebtedness evidenced by this Note. Such Default Prepayment Fee shall be paid
without prejudice to the right of Holder to collect any other amounts provided
to be paid under the Loan Documents. Nothing herein contained shall constitute
an agreement on the part of Holder to accept any prepayment, other than as
expressly provided in Section 8 of this Note.
-6-
<PAGE>
10. Liability of Maker. (a) Except for the personal liability and
------------------
guaranty obligations set forth in the Guaranty (as hereinafter defined), and as
except expressly set forth in this Section 10, notwithstanding anything to the
contrary contained in this Note or in any of the other Loan Documents, but
without in any manner releasing, impairing or otherwise affecting this Note or
any of the other Loan Documents, or the validity hereof or thereof, or the lien
of the Mortgage, neither Maker, nor any present or future "Constituent Member'
(as hereinafter defined) in or agent of Maker nor any present or future
shareholder, member, partner, officer, director, employee, trustee, affiliate,
beneficiary, advisor, principal, participant or agent of or in any corporation,
trust or other entity that is or becomes a Constituent Member in Maker, shall
have any personal liability, directly or indirectly, under or in connection with
the Loan, the Loan Documents or any other instrument or certificate executed in
connection with the Loan Documents or any amendments) or modification(s) to any
of the foregoing made at any time or times, heretofore or hereafter; the
recourse of Holder, and its successors and assigns, under or in connection with
the Loan, the Loan Documents and such instruments, certificates, amendment(s)
and modification(s), shall be limited to the Mortgaged Property only, and
Holder, on its own behalf and on behalf of its successors and assigns and any
other party, hereby waive any such personal liability. A "Constituent Member'
in Maker shall mean any person or entity that is a partner in or member of
Maker, or any person or entity that, directly or indirectly through one or more
limited liability companies or partnerships, is a partner in or member of Maker.
For purposes of the Loan, the Loan Documents and such instruments and
certificates, and any such amendment(s) or modification(s) thereto, neither the
negative capital account of any Constituent Member in Maker, nor any obligation
of any Constituent Member in Maker, to restore a negative capital account or to
contribute or advance capital to Maker or to any other Constituent Member in
Maker shall at any time be deemed to be the property or an asset of Maker or any
such other Constituent Member (and neither Holder nor any of its successors and
assigns shall have any right to collect, enforce or proceed against or with
respect to any such negative capital account or such Constituent Member's
obligation to restore, contribute or advance capital to the applicable limited
liability company or partnership).
(b) Notwithstanding any of the foregoing, nothing contained in this
Section 10 shall be deemed to prejudice the right of Holder following
foreclosure or a deed-in-lieu of foreclosure to (i) recover actual damages
against Copley for fraud, intentional material misrepresentation or intentional
waste; and/or (ii) recover any condemnation proceeds or insurance proceeds or
other similar funds or payments attributable to the Property which have been
intentionally misapplied by Copley (but only to the extent of such intentional
misapplication) or which, under the terms of the Loan Documents, should have
been paid to Holder (but only to the extent of the amount that should have been
paid to Holder), and/or (iii) recover the amount of any tenant security
deposits, prepaid rents or expense recoveries under the Leases (as defined in
the Mortgage) paid to or held by Copley in connection with the Property and not
properly applied or turned over to Holder after foreclosure of the Property or
deed-in-lieu of foreclosure; and/or (iv) recover the rents and revenues received
by Copley from the Property after the occurrence of an Event of Default that is
continuing, which have not been applied to pay any portion of the indebtedness
evidenced by the Note, operating (including leasing) and maintenance expenses of
the Mortgaged Property, Premiums (as
-7-
<PAGE>
defined in the Mortgage), Impositions (as defined in the Mortgage), deposits
into reserve or replacement or other sums required by the Loan Documents or
capital expenditures and repairs; and/or (v) recover actual damages against
Copley, caused by the material breach by Copley of the covenants, obligations
and liabilities, contained in Sections 3.08, 3.11 and 3.17 of the Mortgage.
Copley shall be personally liable for Copley's obligations arising in connection
with the matters set forth in the foregoing clauses (i) to (v) inclusive to the
extent provided for in said clauses. Notwithstanding anything to the contrary
contained in this Section 10, Copley shall have personal liability under the
Unsecured Indemnity Agreement of even date herewith.
(c) Notwithstanding anything to the contrary contained in this Section
10, on the date hereof JMB Realty Corporation ("JMB") and Overseas Partners
Capital Corporation ("OPCC"; JMB and OPCC, collectively, the "Guarantors") have
executed and delivered to Holder a Guaranty Agreement (the "Guaranty") by which
such Guarantors have jointly and severally guaranteed Copley's personal
liability for the matters set forth in Section 10(b) clauses (i) to (v)
inclusive and under the Unsecured Indemnity Agreement, and all costs incurred by
Holder in connection with the recovery of any amounts from Guarantors under the
Guaranty. In the event that (x) JMB transfers its interest in Copley to Urban
Shopping Centers, L.P. ("Urban") in accordance with the Loan Documents, and (y)
Urban delivers to Holder a guaranty, in form, scope and substance substantially
similar to the Guaranty, Holder shall release JMB of its liability under the
Guaranty with respect to matters arising after the date of such delivery.
(d) Copley's obligations arising in connection with the matters set
forth in clauses (b) (i) through (v), above, and under the Unsecured Indemnity
Agreement, are sometimes referred to herein and in the other Loan Documents as
the "Recourse Obligations".
11. Waiver by Maker. Except to the extent otherwise expressly
---------------
provided in the Mortgage, Maker and all endorsers, guarantors and sureties of
this Note, and each of them, hereby waive diligence, demand, presentment for
payment, notice of non-payment, protest, notice of dishonor and notice of
protest, notice of intent to accelerate and notice of acceleration and
specifically consent to, and waive notice of, any renewals or extensions of this
Note, whether made to or in favor of Maker or any other person or persons, and
hereby waive any defense by reason of extension of time for payment or other
indulgence granted by Holder.
12. Exercise of Rights. No single or partial exercise by Holder, or
------------------
delay or omission in the exercise by Holder, of any right or remedy under the
Loan Documents shall preclude, waive or limit any other or further exercise
thereof or the exercise of any other right or remedy. Holder shall at all times
have the right to proceed against any portion of, or interest in, the Property
in such manner as Holder may deem fit, without waiving any other rights or
remedies with respect to the Property, any portion thereof, or interest therein.
The release of any party under this Note shall not operate to release any other
party liable hereunder or under the other Loan Documents.
-8-
<PAGE>
13. Fees and Expenses. If this Note is placed in the hands of an
-----------------
attorney at law for collection by reason of default on the part of Maker, Maker
hereby agrees to pay to Holder, in addition to the sums stated above, the
reasonable costs and expenses of collection, including, without limitation, a
reasonable sum as an attorney's fee.
14. No Modifications. This Note may not be changed, amended or
----------------
modified, except. in a writing expressly intended for such purpose and executed
by Maker and Holder and consented to in writing by the holder of the Class B
Note.
15. Governing Law. This Note has been prepared and negotiated in the
-------------
Commonwealth of Massachusetts and shall be construed and enforced in all
respects in accordance with the laws of the Commonwealth of Massachusetts.
16. Construction. The words "Maker" and "Holder" shall be deemed to
------------
include the respective heirs, personal representatives, successors and assigns
of each, and shall denote the singular and/or plural, and the masculine and/or
feminine, and natural and/or artificial persons, whenever and wherever the
context so requires. Whenever the term "Maker" is used herein, it shall be
deemed to refer to each Maker individually as well as to both Makers
collectively, provided however, that the term "Maker' shall not include UIDC
after the Notice of Direct Lease is given in accordance with the provisions of
Section 3.14 of the Mortgage. If more than one party is named as Maker, the
obligation hereunder of each such party shall be deemed joint and several. The
captions herein are inserted only for convenience of reference and in no way
define, limit or describe the scope or intent of this Note or any particular
paragraph or section hereof, or the proper construction hereof.
17. Notices All notices, demands, requests and consents
-----------
permitted or required under this Note shall be given in the manner prescribed in
the Mortgage.
18. Time of the Essence. Time shall be of the essence in this Note
-------------------
with respect to all of Maker's obligations hereunder.
19. Severability. If any provision hereof should be held
------------
unenforceable or void, then such provision shall be deemed separable from the
remaining provisions and shall in no way affect the validity of this Note,
except that if such provision relates to the payment of any monetary sum, then
Holder may, at its option, declare the indebtedness evidenced hereby immediately
due and payable.
20. JURISDICTION AND VENUE: WAIVER OF JURY TRIAL. MAKER HEREBY
--------------------------------------------
ACKNOWLEDGES THAT THE TRANSACTION EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION.
MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B) WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (1) TO OBJECT TO JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM WITHIN
THE
-9-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS (INCLUDING FEDERAL COURTS HAVING JURISDICTION IN
THE COMMONWEALTH), AND (11) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN
ACTUAL DAMAGES. MAKER AGREES THAT, IN ADDITION TO ANY METHODS OF SERVICE OF
PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS SET FORTH ABOVE (OR SUCH
DIFFERENT ADDRESS PROVIDED IN THE MANNER SET FORTH FOR THE GIVING OF NOTICES
UNDER THIS INSTRUMENT), AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT OR
REFUSAL OF RECEIPT OF SUCH NOTICE. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY JURISDICTION AND IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE
OBLIGATIONS, THE OTHER LOAN DOCUMENTS, OR ANY CLAIM OR DISPUTE HOWSOEVER
ARISING, BETWEEN MAKER AND HOLDER. THIS WAIVER OF JURY TRIAL SHALL BE EFFECTIVE
FOR EACH AND EVERY DOCUMENT EXECUTED BY MAKER OR HOLDER, AND DELIVERED TO HOLDER
OR MAKER, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENT SHALL CONTAIN A
WAIVER OF JURY TRIAL. MAKER FURTHER CONFIRMS THAT THE FOREGOING WAIVERS ARE
INFORMED AND FREELY MADE.
21. Cross-Default. A default under the Class B Note, or any other
-------------
note now or hereafter secured by the Mortgage constitutes a default under this
Note and under the other Loan Documents. When the default under the Class B
Note, or any such other note constitutes an Event of Default under that note, an
Event of Default also will exist under this Note and the other Loan Documents.
22. No Duplication of Payments. Maker and Holder acknowledge and
--------------------------
agree that in no event shall the aggregate amount of the payments of principal
and interest, default interest, late charges, Note Prepayment Fees, Default
Prepayment Fees and any other amounts payable by Maker under this Note
individually and the Class B Note individually exceed the amount of such charges
which would be payable by Maker if the Notes were one combined note in the
aggregate amount of the Loan. With respect to monthly installments of principal
and interest payable under Paragraph 1, Maker will be required to pay only one
aggregate monthly installment of principal and interest under the Notes in an
amount equal to the Monthly Payment Amount. At no time shall Maker be required
to make payments to more than one Holder or servicer of the Loan.
23. Counterparts. This Note may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.
-10-
<PAGE>
IN WITNESS WHEREOF, Maker has executed or caused this Note to be
executed, under seal, by its duly authorized representative(s) the day and year
first above written.
WITNESS/ATTEST: COPLEY PLACE ASSOCIATES,LLC
a Delaware limited liability company
By: Overseas Partners Capital Corp.,
a Delaware corporation, its managing member
/s/Marcia Miller By: /s/ Bruce M. Barone
------------- --------------------
Its President
Hereunto duly authorized
By: JMB Realty Corporation
an Illinois corporation, its member
/s/Stephanie C. Silvers By: /s/Elizabeth Kogen
-------------------- -------------------
Its Vice President
Hereunto duly authorized
URBAN INVESTMENT AND DEVELOPMENT CO.
An Illinois General Partnership
By: JMB Realty Corporation
and Illinois corporation, its general partner
/s/Stephanie C. Silvers By: /s/Elizabeth Kogen
-------------------- ------------------
Its Vice President
Hereunto duly authorized
<PAGE>
STATE OF Georgia )
) SS:
COUNTY OF Dekalb ) July 30, 1997
Then personally appeared before me, the above name /s/ Bruce M.
--------------
Barone, President of Overseas Partners Capital Corp., a Delaware corporation,
- -----------------
manager member of Copley Place Associates, LLC, a Delaware limited liability
company, who executed the foregoing instrument and acknowledged that he executed
the foregoing instrument as the free act and deed of said corporation in its
capacity as the managing member of said limited liability company pursuant to
proper authorization of the members of such limited liability company, and as
the free act and as the free act and deed of said limited liability company.
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires: 12/12/2000
STATE OF New York )
) SS:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named /s/ Elizabeth
---------
Kogen,, Vice President of JMB Realty Corporation, a Delaware corporation, a
- -----------------------
member of Copley Place Associates, LLC, a Delaware limited liability company,
who executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as a member of said limited liability company pursuant to proper
authorization of the members of such limited liability company, and as the free
act and deed of said limited liability company.
/s/ Frank S. Caiazzo
----------------
Notary Public
My Commission Expires:
FRANK S. CAIAZZO
Notary Public, State of Now York
No. 43-4777178
Qualified in Richmond County Certificate
filed in New York County.
Commission Expires March 30, 1998
<PAGE>
STATE OF New York )
) SS:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named /s/ Elizabeth
-------------
Kogen, Vice President of JMB Realty Corporation, a Delaware corporation, a
- ----------------------
member of Urban Investment and Development Company, an Illinois limited
partnership, who executed the foregoing instrument and acknowledged that he
executed the foregoing instrument as the free act and deed of said corporation
in its capacity as the general partner of said partnership company pursuant to
proper authorization of the members of such partnership and as the free act and
deed of said partnership.
Notary Public
/s/ Frank S. Caiazzo
--------------------
My Commission Expires:
FRANK S. CAIAZZO
Notary Public, State of Now York
No. 43-4777173
Qualified in Richmond County Certificate
filed in New York County.
Commission Expires March 30, 1998
<PAGE>
EXHIBIT A
Sample Illustration of a partial prepayment of the Copley Place Mortgage.
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.44% Mortgage Loan
1,355,466 Monthly P&I
Monthly Loan Cash Flow with Partial Prepayment
================================================================================
<TABLE>
<CAPTION>
Borrower's Total Cash
Payment Date Balance Total Principal Prepayment Total Interest Flow
<S> <C> <C> <C> <C> <C>
7/1/97 195,000,000
8/1/97 195,000,000 - - 1,209,000 1,209,000
9/1/97 194,853,534 146,466 - 1,209,000 1,355,466
10/1/97 194,706,161 147,374 - 1,208,092 1,355,466
11/1/97 194,557,873 148,287 - 1,207,178 1,355,466
12/1/97 194,406,666 149,207 - 1,206,259 1,355,466
1/1/98 94,258,534 150,132 100,000,000 1,205,334 101,355,466
2/1/98 93,487,472 771,063 - 584,403 1,355,466
3/1/98 92,711,628 775,843 - 579,622 1,355,466
4/1/98 91,930,975 780,654 - 574,812 1,355,466
5/1/98 91,145,481 785,494 - 569,972 1,355,466
6/1/98 90,355,117 790,364 - 565,102 1,355,466
7/1/98 89,559,853 795,264 - 560,202 1,355,466
8/1/98 88,759,659 800,195 - 555,271 1,355,466
9/1/98 87,954,503 805,156 - 550,310 1,355,466
10/1/98 87,144,355 810,148 - 545,318 1,355,466
11/1/98 86,329,185 815,171 - 540,295 1,355,466
12/1/98 85,508,960 820,225 - 535,241 1,355,466
1/1/99 84,683,650 825,310 - 530,156 1,355,466
2/1/99 83,853,223 830,427 - 525,039 1,355,466
3/1/99 83,017,647 835,576 - 519,890 1,355,466
4/1/99 82,176,891 840,756 - 514,709 1,355,466
5/1/99 81,330,922 845,969 - 509,497 1,355,466
6/1/99 80,479,708 851,214 - 504,252 1,355,466
7/1/99 79,623,216 856,491 - 498,974 1,355,466
8/1/99 78,761,415 861,802 - 493,664 1,355,466
9/1/99 77,894,270 867,145 - 458,321 1,355,466
</TABLE>
<PAGE>
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.44% Mortgage Loss
1,355,466 Monthly P & I
Mortgage Loan Cash Flow with Partial Prepayment
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Borrower's Total Cash
Payment Date Balance Total Principal Prepayment Total Interest Flow
<S> <C> <C> <C> <C> <C>
10/1/99 77,021,749 872,521 - 482,944 1,355,466
11/1/99 76,143,818 877,851 - 477,535 1,355,466
12/1/99 75,260,444 883,374 - 472,092 1,355,466
1/1/00 74,371,593 888,851 - 466,615 1,355,466
2/1/00 73,477,231 894,362 - 461,104 1,355,466
3/1/00 72,577,324 899,907 - 455,559 1,355,466
4/1/00 71,671,838 905,486 - 449,979 1,355,466
5/1/00 70,760,738 911,100 - 444,385 1,355,466
6/1/00 69,843,989 916,749 - 438,717 1,355,466
7/1/00 68,921,556 922,433 - 433,033 1,355,466
8/1/00 67,993,404 928,152 - 427,314 1,355,466
9/1/00 67,059,497 933,907 - 421,559 1,355,466
10/1/00 66,119,800 939,697 - 415,769 1,355,466
11/1/00 65,174,277 945,523 - 409,943 1,355,466
12/1/00 64,222,892 951,385 - 404,081 1,355,466
1/1/01 63,265,608 957,284 - 398,182 1,355,466
2/1/01 62,302,390 963,219 - 392,247 1,355,466
3/1/01 61,333,199 969,191 - 386,275 1,355,466
4/1/01 60,357,999 975,200 - 380,266 1,355,466
5/1/01 59,376,753 981,246 - 374,220 1,355,466
6/1/01 58,389,423 987,330 - 368,136 1,355,466
7/1/01 57,395,972 993,451 - 362,014 1,355,466
8/1/01 56,396,361 999,611 - 355,855 1,355,466
9/1/01 55,390,553 1,005,808 - 349,657 1,355,466
10/1/01 54,378,509 1,012,044 - 343,421 1,355,466
11/1/01 53,360,190 1,018,319 - 337,147 1,355,466
12/1/01 52,335,557 1,024,632 - 330,833 1,355,466
1/1/02 51,304,572 1,030,985 - 324,480 1,355,466
</TABLE>
<PAGE>
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage Note A or Note B
7.44% Mortgage Loan
1,355,466 Monthly
Mortgage Loan Cash Flow with Partial Payment
<TABLE>
<CAPTION>
Borrower's Balance Total Principal Prepayment Total Interest Total Cash
Payment Date Flow
<S> <C> <C> <C> <C> <C>
02/01/02 50,267,195 1,037,377 318,088 1,355,466
03/01/02 49,223,386 1,043,809 311,657 1,355,466
04/01/02 48,173,105 1,050,281 305,185 1,355,466
05/01/02 47,116,312 1,056,792 298,673 1,355,466
06/01/02 46,052,967 1,063,345 292,121 1,355,466
07/01/02 44,983,031 1,069,937 285,528 1,355,466
08/01/02 43,906,460 1,076,571 278,895 1,355,466
09/01/02 42,823,214 1,083,246 272,220 1,355,466
10/01/02 41,733,252 1,069,962 265,504 1,355,466
11/01/02 40,636,532 1,096,720 258,746 1,355,466
12/01/02 39,533,014 1,103,519 251,947 1,355,466
01/01/03 38,422,653 1,110,361 245,105 1,355,466
02/01/03 37,305,408 1,117,245 238,220 1,355,466
03/01/03 36,181,235 1,124,172 231,294 1,355,466
04/01/03 35,050,093 1,131,142 224,324 1,355,466
05/01/03 33,911,938 1,138,155 217,311 1,355,466
06/01/03 32,766,727 1,145,212 210,254 1,355,466
07/01/03 31,614,415 1,152,312 203,154 1,355,466
08/01/03 30,454,958 1,159,456 196,009 1,355,466
09/01/03 29,288,313 1,166,645 188,821 1,355,466
10/01/03 28,114,435 1,173,878 181,588 1,355,466
11/01/03 26,933,279 1,181,158 174,309 1,355,466
12/01/03 25,744,800 1,188,479 166,986 1,355,466
01/01/04 24,548,952 1,195,848 159,618 1,355,466
02/01/04 23,345,690 1,203,262 152,204 1,355,466
03/01/04 22,134,968 1,210,722 144,743 1,355,466
04/01/04 20,916,739 1,218,229 137,237 1,355,466
05/01/04 19,690,957 1,225,782 129,684 1,355,466
</TABLE>
<PAGE>
Sample Illustration of a partial prepayment of Copley Place Mortgage.
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.38% Note B (Mortgage Loan Rate Less Servicing Fee)
1.38% Strip Interest (Mortgage Loan Rate Less Note A Rate Less
Servicing Fee)
0.08% Servicing Fee
Note B Cash Flow
Interest Strip
--------------
<TABLE>
<CAPTION>
Borrower's Balance Total Interest A-2 Strip A-1 Strip B-1 Strip Total Total Cash Total Amount
Payment Date Principal from Note Interest Flow Paid to Note A
B and Note B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/01/97 97,500,000 600,438 112,938 4,063
08/01/97 97,500,000 600,438 112,938 4,063 4,063 721,500 721,500 1,209,000
09/01/97 97,500,000 600,438 112,768 4,056 4,063 721,500 721,500 1,355,466
10/01/97 97,500,000 600,438 112,597 4,050 4,063 721,324 721,324 1,355,466
11/01/97 97,500,000 600,438 112,425 4,044 4,063 721,147 721,147 1,355,466
12/01/97 97,500,000 600,438 112,253 4,038 4,063 720,969 720,969 1,355,466
01/01/98 94,258,534 3,241,486 600,438 4,063 720,790 3,962,256 101,355,466
02/01/98 93,487,471 771,063 580,475 3,927 584,401 1,355,466 1,355,466
03/01/98 92,711,628 775,843 575,727 3,895 579,622 1,355,466 1,355,466
04/01/98 91,930,974 780,654 570,949 3,863 574,812 1,355,466 1,355,466
05/01/98 91,145,480 785,494 566,142 3,830 569,972 1,355,466 1,355,466
06/01/98 90,355,116 790,364 561,304 3,798 565,102 1,355,466 1,355,466
07/01/98 89,559,853 795,264 556,437 3,765 560,202 1,355,466 1,355,466
08/01/98 88,759,659 800,195 551,539 3,732 555,271 1,355,466 1,355,466
09/01/98 87,954,503 806,156 546,612 3,698 550,310 1,355,466 1,355,466
10/01/98 87,144,355 810,148 541,653 3,665 545,318 1,355,466 1,355,466
11/01/98 86,329,184 815,171 536,664 3,631 540,295 1,355,466 1,355,466
12/01/98 85,508,960 820,225 531,644 3,597 535,241 1,355,466 1,355,466
01/01/99 84,683,650 825,310 526,593 3,563 530,156 1,355,466 1,355,466
02/01/99 83,853,223 830,427 521,510 3,528 525,039 1,355,466 1,355,466
03/01/99 83,017,647 835,576 516,396 3,494 519,890 1,355,466 1,355,466
04/01/99 82,176,891 840,756 511,250 3,459 514,709 1,355,466 1,355,466
05/01/99 81,330,922 845,969 506,073 3,424 509,497 1,355,466 1,355,466
06/01/99 80,479,708 851,214 500,863 3,389 504,252 1,355,466 1,355,466
07/01/99 79,623,218 856,491 495,621 3,353 498,974 1,355,466 1,355,466
08/01/99 78,761,415 861,802 490,346 3,318 493,664 1,355,466 1,355,466
09/01/99 77,894,270 867,145 485,039 3,282 488,321 1,355,466 1,355,466
</TABLE>
<PAGE>
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage Note A or Note B
7.44% Mortgage Loan
1,355,466 Monthly
Mortgage Loan Cash Flow with Partial Prepayment
<TABLE>
<CAPTION>
Borrower's Balance Total Principal Prepayment Total Interest Total Cash
Payment Date Flow
<S> <C> <C> <C> <C> <C>
06/01/04 18,457,575 1,233,382 122,064 1,355,466
07/01/04 17,216,546 1,241,029 114,437 1,355,466
08/01/04 15,967,823 1,248,723 106,743 1,355,466
09/01/04 14,711,358 1,256,465 99,001 1,355,466
10/01/04 13,447,103 1,264,255 91,210 1,355,466
11/01/04 12,175,009 1,272,094 83,372 1,355,466
12/01/04 10,895,028 1,279,981 75,485 1,355,466
01/01/05 9,607,112 1,287,916 67,549 1,355,466
02/01/05 8,311,210 1,295,902 59,564 1,355,466
03/01/05 7,007,274 1,303,936 51,530 1,355,466
04/01/05 5,695,253 1,312,021 43,445 1,355,466
05/01/05 4,375,098 1,320,155 35,311 1,355,466
06/01/05 3,046,758 1,328,340 27,126 1,355,466
07/01/05 1,710,182 1,336,576 18,890 1,355,466
08/01/05 365,320 1,344,863 10,603 1,355,466
09/01/05 365,320 2,265 367,585
10/01/05
11/01/05
12/01/05
01/01/06
02/01/06
03/01/06
04/01/06
05/01/06
06/01/06
07/01/06
08/01/06
09/01/06
</TABLE>
<PAGE>
Sample Illustration of a partial prepayment of Copley Place Mortgage.
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.38% Note B (Mortgage Loan Rate Less Servicing Fee)
1.38% Strip Interest (Mortgage Loan Rate Less Note A Rate Less
Servicing Fee)
0.08% Servicing Fee
Note B Cash Flow
Interest Strip
--------------
<TABLE>
<CAPTION>
Borrower's Balance Total Interest from A-2 A-1 B-1 Total Total Cash Total Amount
Payment Date Principal Note B Strip Strip Strip Interest Flow Paid to Note
A and Note B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/01/99 77,021,749 872,521 479,699 3,246 482,944 1,355,466 1,355,466
11/1/99 76,143,818 877,931 474,326 3,209 477,535 1,355,466 1,355,466
12/1/99 75,260,444 883,374 468,919 3,173 472,092 1,355,466 1,355,466
01/01/00 74,371,593 888,851 463,479 3,136 486,015 1,355,466 1,355,466
02/01/00 73,477,231 894,362 458,005 3,099 461,104 1,355,466 1,355,466
03/01/00 72,577,324 899,907 452,497 3,062 455,559 1,355,466 1,355,466
04/01/00 71,671,836 905,488 446,955 3,024 449,979 1,355,466 1,355,466
05/01/00 70,760,736 911,100 441,379 2,936 444,365 1,355,466 1,355,466
06/01/00 69,843,989 916,749 435,768 2,948 438,717 1,355,466 1,355,466
07/01/00 68,921,556 922,433 430,123 2,910 433,033 1,355,466 1,355,466
08/01/00 67,993,404 928,152 424,442 2,872 427,314 1,355,466 1,355,466
09/01/00 67,059,497 933,907 416,726 2,833 421,559 1,355,466 1,355,466
10/01/00 66,119,800 939,697 412,975 2,794 415,769 1,355,466 1,355,466
11/01/00 65,174,277 945,523 407,188 2,755 409,943 1,355,466 1,355,466
12/01/00 64,222,892 951,385 401,365 2,716 404,081 1,355,466 1,355,466
01/01/01 63,285,608 957,284 395,508 2,676 398,182 1,355,466 1,355,466
02/01/01 62,302,390 963,219 389,611 2,636 392,247 1,355,466 1,355,466
03/01/01 61,333,199 969,191 383,679 2,596 386,275 1,355,466 1,355,466
04/01/01 60,357,999 975,200 377,710 2,556 380,266 1,355,466 1,355,466
05/01/01 59,376,753 981,246 371,705 2,515 374,220 1,355,466 1,355,466
06/01/01 58,389,423 987,330 365,662 2,474 368,136 1,355,466 1,355,466
07/01/01 57,395,972 993,451 359,582 2,433 362,014 1,355,466 1,355,466
08/01/01 56,396,361 999,611 353,464 2,391 355,855 1,355,466 1,355,466
09/01/01 55,390,553 1,005,808 347,308 2,350 349,657 1,355,466 1,355,466
10/01/01 54,378,509 1,012,044 341,113 2,308 343,421 1,355,466 1,355,466
11/01/01 53,360,190 1,018,319 334,881 2,266 337,147 1,355,466 1,355,466
12/01/01 52,335,557 1,024,632 328,810 2,223 330,633 1,355,466 1,355,466
01/01/02 51,304,572 1,030,985 322,300 2,181 324,480 1,355,466 1,355,466
</TABLE>
<PAGE>
Sample Illustration of a partial prepayment of Copley Place Mortgage.
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.38% Note B (Mortgage Loan Rate Less Servicing Fee)
1.38% Strip Interest (Mortgage Loan Rate Less Note A Rate Less
Servicing Fee)
0.08% Servicing Fee
Note B Cash Flow
- --------------------------------------------------------------------------------
Interest Strip
--------------
<TABLE>
<CAPTION>
Borrower's Balance Total Interest A-2 A-1 B-1 Total Total Cash Total Amount
Payment Principal from Note Strip Strip Strip Interest Flow Paid to Note
Date B A and Note B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/01/02 50,267,195 1,037,377 315,951 2,138 318,089 1,355,466 1,355,466
03/01/02 49,223,386 1,043,809 308,562 2,094 311,656 1,355,466 1,355,466
04/01/02 48,173,105 1,050,281 303,134 2,051 305,185 1,355,466 1,355,466
05/01/02 47,116,312 1,056,792 296,666 2,007 296,673 1,355,466 1,355,466
06/01/02 46,052,968 1,063,345 290,158 1,963 292,121 1,355,466 1,355,466
07/01/02 44,983,031 1,069,937 283,610 1,919 285,529 1,355,466 1,355,466
08/01/02 43,906,460 1,076,571 277,020 1,874 278,894 1,355,466 1,355,466
09/01/02 42,823,214 1,083,246 270,391 1,829 272,220 1,355,466 1,355,466
10/01/02 41,733,252 1,089,962 263,720 1,784 265,504 1,355,466 1,355,466
11/01/02 40,636,533 1,096,720 257,007 1,739 258,746 1,355,466 1,355,466
12/01/02 39,530,014 1,103,519 250,253 1,693 251,946 1,355,466 1,355,466
01/01/03 38,422,653 1,110,361 243,457 1,647 245,104 1,355,466 1,355,466
02/01/03 37,305,408 1,117,245 236,620 1,601 238,221 1,355,466 1,355,466
03/01/03 38,181,235 1,124,172 229,739 1,564 231,293 1,355,466 1,355,466
04/01/03 35,050,093 1,131,142 222,816 1,508 224,324 1,355,466 1,355,466
05/01/03 33,911,938 1,138,155 215,850 1,460 217,310 1,355,466 1,355,466
06/01/03 32,766,727 1,145,212 208,841 1,413 210,254 1,355,466 1,355,466
07/01/03 31,614,415 1,152,312 201,788 1,365 203,153 1,355,466 1,355,466
08/01/03 30,454,958 1,159,456 194,692 1,317 198,009 1,355,466 1,355,466
09/01/03 29,288,313 1,166,645 187,552 1,269 188,821 1,355,466 1,355,466
10/01/03 28,114,435 1,173,878 180,367 1,220 181,587 1,355,466 1,355,466
11/01/03 26,933,279 1,181,156 173,138 1,171 174,309 1,355,466 1,355,466
12/01/03 25,744,800 1,188,479 165,864 1,122 166,986 1,355,466 1,355,466
01/01/04 24,548,952 1,195,848 158,545 1,073 159,618 1,355,466 1,355,466
02/01/04 23,345,690 1,203,282 151,181 1,023 152,204 1,355,466 1,355,466
03/01/04 22,134,967 1,210,722 143,771 972 144,743 1,355,466 1,355,466
04/01/04 20,916,738 1,218,229 136,315 922 137,237 1,355,466 1,355,466
05/01/04 19,690,957 1,225,782 128,812 872 129,684 1,355,466 1,355,466
</TABLE>
<PAGE>
Sample Illustration of a partial prepayment of Copley Place Mortgage.
This is a fictious example for Illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B
7.38% Note B (Mortgage Loan Rate Less Servicing Fee)
1.38% Strip Interest (Mortgage Loan Rate Less Note A Rate Less
Servicing Fee)
0.08% Servicing Fee
Note B Cash Flow
-----------------------------------------------------------------------------
Interest Strip
----------------------------------
<TABLE>
<CAPTION>
Borrower's Balance Total Interest A-2 A-1 B-1 Total Total Total Amount
Payment Principal from Note Strip Strip Strip Interest Cash Paid to Note
Date B Flow A and Note B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/01/04 18,457,575 1,233,382 121,263 820 122,084 1,355,466 1,355,466
07/01/04 17,216,546 1,241,029 113,668 769 114,437 1,355,466 1,355,466
08/01/04 15,967,823 1,248,723 106,025 717 106,743 1,355,466 1,355,466
09/01/04 14,711,358 1,256,465 98,335 665 99,001 1,355,466 1,355,466
10/01/04 13,447,103 1,264,255 90,597 613 91,210 1,355,466 1,355,466
11/01/04 12,175,009 1,272,094 82,812 560 83,372 1,355,466 1,355,466
12/01/04 10,895,028 1,279,981 74,978 507 75,485 1,355,466 1,355,466
01/01/05 9,607,112 1,287,916 67,095 454 67,549 1,355,466 1,355,466
02/01/05 8,311,210 1,295,902 59,164 400 59,564 1,355,466 1,355,466
03/01/05 7,007,274 1,303,936 51,183 346 51,530 1,355,466 1,355,466
04/01/05 5,695,254 1,312,021 43,153 292 43,445 1,355,466 1,355,466
05/01/05 4,375,099 1,320,155 35,073 237 35,311 1,355,466 1,355,466
06/01/05 3,046,759 1,328,340 26,943 182 27,126 1,355,466 1,355,466
07/01/05 1,710,183 1,336,576 18,763 127 18,890 1,355,466 1,355,466
08/01/05 365,320 1,344,863 10,532 71 10,603 1,355,466 1,355,466
09/01/05 365,320 2,250 15 2,265 367,585 367,585
10/01/05
11/01/05
12/01/05
01/01/06
02/01/06
03/01/06
04/01/06
05/01/06
06/01/06
07/01/06
08/01/06
09/01/06
</TABLE>
<PAGE>
Exhibit 10(ttt)
<PAGE>
CLASS B PROMISSORY NOTE
$97,500,000.00 July 30, 1997
New York, New York
FOR VALUE RECEIVED, COPLEY PLACE ASSOCIATES, LLC (together with its
successors and assigns, "Copley"), a Delaware limited liability company, having
its principal place of business c/o Overseas Partners Capital Corp., 115
Perimeter Center Place, Suite 940, Atlanta, Georgia 30346 and URBAN INVESTMENT
AND DEVELOPMENT CO. ("UIDC"), an Illinois general partnership, having an office
at 900 North Michigan Avenue, Chicago, Illinois 60611 (Copley and UIDC being
referred to collectively herein as "Maker") promise to pay to the order of
METROPOLITAN LIFE INSURANCE COMPANY ("Holder"), a New York corporation, at its
principal place of business at One Madison Avenue, New York, New York 10010, or
such other place as Holder may from time to time designate, the principal sum of
NINETY-SEVEN MILLION FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($97,500,000.00)
with interest, as specified below, in lawful money of the United States of
America, which shall be legal tender in payment of all debts and dues, public
and private, at the time of payment.
This Note evidences a portion of a loan (the "LOAN") in the aggregate
-------
principal sum of One Hundred Ninety-Five Million and No/100 Dollars
($195,000,000.00), the other portion of which Loan is evidenced by a Class A
Promissory Note (the "Class A Note") in the principal sum of Ninety-Seven
---------------
Million Five Hundred Thousand and No/100 Dollars ($97,500,000.00) dated the date
of this Note made by Maker to Holder. This Note, together with the Class A
Note, are collectively referred to as the "NOTES".
-------
1. Payment of Principal and Interest. Commencing on the first day of
---------------------------------
the second (2nd) calendar month next succeeding the Advance Date (hereinafter
defined) and on the first day of each and every calendar month thereafter, to
and including, the first day of July, 2007 (each a "Payment Date"), there shall
be due and payable under the Notes equal monthly installments of principal and
interest on the outstanding principal of the Loan at the rate of seven and
44/100ths percent (7.44%) per annum (the "Loan Interest Rate"), each in the
aggregate amount of One Million Three Hundred Fifty-Five Thousand Four Hundred
Sixty Five and 67/100 DOLLARS ($1,355,465.67) (the "Monthly Payment Amount"),
based upon an amortization period of thirty (30) years. Maker hereby
acknowledges and agrees that a substantial portion of the original principal sum
evidenced by the Notes shall be outstanding and due on the Maturity Date (as
hereinafter defined). Such final payment of the unpaid principal balance of the
Loan, together with all remaining accrued and unpaid interest thereon, and all
other sums then outstanding evidenced by the Notes or secured by the Mortgage
(as hereinafter defined) or evidenced or secured by any other instrument
collateral, incidental or related thereto (the Notes, the Mortgage and any and
all other documents evidencing, securing or relating to the Loan, and all
renewals, modifications, consolidations and extensions of such
<PAGE>
documents being herein collectively referred to as the "Loan Documents"), shall
be immediately due and payable in full on such Maturity Date.
Interest on this Note shall accrue from the date hereof (the "Advance
Date") as follows: (a) interest on the principal sum evidenced by this Note at
the rate of seven and 36/100ths percent (7.36%) per annum (the "Class B
Interest Rate"); plus (b) interest at the rate of 8/100ths percent (.08%) per
annum (the "Class B Strip Interest Rate") on the principal sum evidenced by this
Note (the "Class B Strip Interest"), plus (c) interest at the rate of 8/100ths
percent (.08%) per annum (the "Class A-1 Strip Interest Rate") on the
outstanding principal amount of the Class A Note (the "Class A-1 Strip
Interest"); plus (d) interest at the rate of 61/100ths percent (.61%) per annum
(the "Class A-2 Strip Interest Rate") on the outstanding principal amount of the
Class A Note (the "Class A-2 Strip Interest").
Interest shall be calculated on the basis of a thirty (30) day month,
and a three hundred sixty (360) day year; provided, however, that the
calculation of interest under Section 2(a)(i) shall be done on the basis of the
actual number of days in such months that the Loan is outstanding and a 365-day
or 366-day year, as applicable.
2. Application of Payment. (a) Unless an Event of Default (as defined
----------------------
in the Mortgage) shall have occurred and be continuing, principal and interest
under this Note shall be payable as follows:
(i) Interest accruing from the Advance Date to and including the
last day of the calendar month in which the Advance Date occurs shall be paid on
the first day of the calendar month next succeeding the Advance Date;
(ii) Commencing on the first day of the second (2nd) calendar month
next succeeding the Advance Date and on the first day of each and every calendar
month thereafter, to but excluding the date on which the entire principal sum
outstanding under the Class A Note, together with all interest accrued thereon,
has been paid in full (the "Amortization Commencement Date"), there shall be due
and payable monthly installments of accrued but unpaid interest payable under
this Note (a) at the Class B Interest Rate on the outstanding principal balance
of this Note, (b) at the Class B Strip Interest Rate on the outstanding
principal balance of this Note, (c) at the Class A-1 Strip Interest Rate on the
outstanding principal balance of the Class A Note and (d) at the Class A-2 Strip
Interest Rate on the outstanding principal balance of the Class A Note;
(iii) On the Amortization Commencement Date, a payment of principal
and interest equal to the Monthly Payment Amount minus the amount of the final
payment of any remaining scheduled principal and interest under the Class A
Note on such date;
(iv) Commencing on the first day of the first (lst) calendar month
succeeding the Amortization Commencement Date and on the, first day of each and
every calendar month thereafter, to and including the first day of July, 2007,
there shall be due and payable monthly installments of principal and interest at
the Loan Interest Rate in an amount equal to the Monthly Payment Amount; and
<PAGE>
(v) On August 1, 2007 (the "Maturity Date"), unless sooner paid in
full, a final payment in the aggregate amount of the unpaid principal sum
evidenced by this Note, all accrued and unpaid interest thereon, and all other
sums evidenced by this Note, shall become immediately due and payable in full.
(b) If an Event of Default under the Mortgage shall have occurred
and be continuing, all amounts tendered by Maker or otherwise available for
payment of Loan shall be applied, in the following order of priority:
(i) to accrued and unpaid Class A-1 Strip Interest under this Note
and to accrued and unpaid Class B Strip Interest under this
Note, pro rata in accordance with the amounts of such interest
that is accrued and unpaid;
(ii) to accrued and unpaid interest on the Class A Note at the Class
A Interest Rate;
(iii) to the principal of the Class A Note until such principal has
been paid in full;
(iv) to accrued and unpaid interest on this Note at the Class B
Interest Rate and to accrued and unpaid Class A-2 Strip
Interest under this Note;
(v) to the principal of this Note until such principal has been
paid in full;
(vi) to any Note Prepayment Fee or Default Prepayment Fee on the
Class A Note and this Note, in that order;
(vii) to any default interest in excess of the interest paid in
accordance with clauses (i) and (iii) above on the Class A Note
and this Note, in that order;
(viii) to late charges (applied to the Notes depending on the
proportion of the related late payment applicable to each
Note); and
(ix) to any other amounts payable under the Mortgage or any of the
other Loan Documents.
3. Security. This Note is secured by, among other things, that
--------
certain Leasehold Mortgage, Security Agreement and Fixture Financing Statement
of even date herewith (the "Mortgage"; which term includes all renewals,
modifications, consolidations and/or extensions thereof) granted by Maker to
Holder. Each capitalized term used herein, unless otherwise defined herein,
shall have the same meaning as set forth in the Mortgage. The obligations,
covenants and agreements of the Mortgage are hereby made a part of this Note to
the same extent and with the same effect as if they were fully set forth herein,
and Maker does hereby agree to perform and keep each and every obligation,
covenant and agreement set forth in this Note and in the other Loan Documents,
subject to applicable notice
<PAGE>
and cure provisions, if any, in the Loan Documents. This Note shall evidence
the indebtedness described herein, any future loans or advances that may be made
to or on behalf of Maker by Holder at any time or times hereafter under the
Mortgage and allocable by Holder to this Note, and any other amounts required to
be paid by Maker under the Loan Documents and allocable by Holder to this Note,
and any such loans, advances or amounts shall be added to the indebtedness
evidenced by this Note, and shall bear interest at the Loan Interest Rate unless
a greater rate is expressly provided for in this Note or the other Loan
Documents. The Mortgage shall secure among other things, all the indebtedness
described herein and in the Class A Note, any future loans or advances that may
be made to or on behalf of Maker by Holder at any time or times hereafter under
the Mortgage, and any other amounts required to be paid by Maker under the Loan
Documents.
4. Late Charge. In the event that any installment of interest,
-----------
principal, principal and interest or required escrow deposits shall become
overdue for a period in excess of seven (7) days, a "late charge" of four cents
($.04) for each dollar ($1.00), or part thereof, so overdue may be charged to
Maker by Holder for the purpose of defraying the expenses incident to handling
such delinquent payment. This charge shall be in addition to, and not in lieu
of, any other remedy Holder may have and is in addition to Holder's right to
collect reasonable fees and charges of any agents or attorneys which Holder
employs in connection with any Event of Default. Such late charges if not
previously paid shall become part of the indebtedness evidenced hereby, and
shall, at the option of Holder, be added to any succeeding monthly payment due
under the Loan Documents. Failure to pay such late charges with such succeeding
monthly payment shall constitute an Event of Default and such late charges shall
bear interest at the Default Rate from the date due.
5. Acceleration Upon an Event of Default. It is hereby expressly
-------------------------------------
agreed that upon the failure of Maker to pay any sum herein specified when due
(after giving effect to applicable notice and cure periods, if any), or upon the
occurrence of any other Event of Default, the unpaid principal sum evidenced by
the Note, all accrued and unpaid interest thereon, and all other sums evidenced
and/or secured by the Loan Documents shall, at the option of Holder, become
immediately due and payable, and payment of the unpaid principal sum evidenced
by this Note, all accrued and unpaid interest thereon, and all other sums
evidenced or secured by the Loan Documents, may be enforced and recovered at
once.
6. Interest Upon an Event of Default. Upon the occurrence of an
---------------------------------
Event of Default (including, without limitation, the failure of Maker to pay any
sum herein specified when due (after giving effect to applicable notice and cure
periods, if any), the unpaid principal sum evidenced by this Note, all accrued
and unpaid interest thereon, and all other sums evidenced and/or secured by the
Loan Documents and allocable by Holder to this Note shall bear interest at a
rate per annum (the "Default Rate") equal to the lesser of: (i) the highest rate
of interest permitted to be contracted for under the laws of the Commonwealth of
Massachusetts (the "State"), or (ii) four percent (4%) per annum above the Loan
Interest Rate. The Default Rate shall be in lieu of any other interest rate
otherwise applicable and shall commence, without notice, immediately upon and
from the occurrence of such Event of
<PAGE>
Default and shall continue until all defaults are cured and all sums, if any,
then due and payable under the Loan Documents are paid in full.
7. Limitation on Interest. All agreements made by Maker relating
----------------------
directly or indirectly to the indebtedness evidenced by this Note and the other
Loan Documents are expressly limited so that in no event or contingency
whatsoever shall the amount of interest received, charged or contracted for by
Holder exceed the highest lawful amount of interest permissible under the laws
of the State. If, under any circumstances whatsoever, performance of any
provision of this Note or the other Loan Documents, at the time performance of
such provision shall be due, shall result in the highest lawful rate of interest
permissible under the laws of the State being exceeded, then ipso facto, the
amount of interest received, charged or contracted for by Holder shall be
reduced to the highest lawful amount of interest permissible under the laws of
the State, and if for any reason whatsoever, Holder shall ever receive, charge
or contract for, as interest, an amount which would be deemed unlawful, such
interest shall, at the option of Holder, be refunded to Maker (if theretofore
paid) or applied to the payment of the last maturing installment or installments
of principal to be paid on this Note (whether or not due and payable) and not to
the payment of interest. Without limitation of the foregoing, any amounts
contracted for, charged or received under the Loan Documents relating directly
or indirectly to the indebtedness evidenced by this Note, included for the
purpose of determining whether the interest rate would exceed the highest lawful
rate, shall be calculated, to the extent permitted by the laws of the State, by
amortizing, prorating, allocating and spreading such interest over the period of
the full stated term of this Note.
8. Prepayment Privilege. The principal sum evidenced by this Note
--------------------
may not be prepaid, in whole or in part, at any time during the term hereof
except as set forth in this Section 8 or as required by Holder pursuant to
Sections 1.04, 1.07 or 1.08 of the Mortgage (it being agreed that any such
payment required by Holder under Sections 1.04, 1.07 and 1.08 of the Mortgage,
as aforesaid, shall not be considered a prepayment for purposes of this Section
8 or Section 9, below, and, notwithstanding anything to the contrary herein
contained, no Note Prepayment Fee or Default Prepayment Fee shall be due and
payable in connection therewith). Maker shall have the right to prepay the
entire principal sum evidenced by the Notes collectively and secured by the
Mortgage (but not a part of said indebtedness) together with all accrued and
unpaid interest thereon and all other sums, payable under the Notes, the
Mortgage, and the other Loan Documents provided that: (i) all monthly
installment payments due on or before the date of prepayment have been paid in
full; (ii) Holder and the holder of the Class A Note have received a written
notice of prepayment, which notice shall specify an estimated date of prepayment
no less than sixty (60) days subsequent to such holder's receipt of such notice,
provided that in the event that Maker shall give such notice and then revoke
such notice three times in any one calendar year, then the fourth such notice in
such calendar year shall be irrevocable; (iii) Holder and the holder of the
Class A Note have received five business days written notice of the actual date
of prepayment, which shall be no earlier than the estimated date of prepayment
and shall at all times be on a Payment Date, and which notice once received by
Holder shall be irrevocable notwithstanding the provisions of clause (ii) above;
and (iv) the Note Prepayment Fee (as hereinafter defined) is paid by Maker to
Holder and the holder of the Class A Note on the date of prepayment.
<PAGE>
Maker agrees that Holder shall have no obligation to accept any prepayment of
the principal sum evidenced by this Note except as expressly stated in this
Section.
In the event any partial prepayment of the Loan is required pursuant
to Sections 1.04, 1.07 or 1.08 of the Mortgage, any principal amount prepaid
shall, if no Event of Default shall have occurred and be continuing, be applied
first to the payment of any Class A-1 Strip Interest and Class B Strip Interest
payable under this Note through the next Payment Date, pro rata in accordance
with the amounts of such interest that is payable, next, to payment of any
interest payable under the Class A Note through the next Payment Date, next, to
the payment of the principal amount outstanding under the Class A Note, next, to
the payment of any Class A-2 Interest and any interest on the outstanding
principal balance of this Note at the Class B Interest Rate payable under this
Note through the next Payment Date, and the balance, if any, to the payment of
the principal amount outstanding under this Note. Without in any way affecting
the rights or obligations of any parties to this Note, and for illustrative
purposes only, attached hereto as Exhibit A is an example of how payments under
the Loan would be applied in the event of such a partial prepayment. If an Event
of Default shall have occurred and be continuing, any amount so prepaid shall be
applied in accordance with the provisions of Section 2(b) hereof.
For purposes hereof, the term "Note Prepayment Fee" shall mean the
difference between (i) the present value of all remaining payments of principal
and interest including without limitation, the outstanding principal due on the
Maturity Date, discounted at the rate which, when adjusted for a monthly payment
interval, is equivalent to the Enhanced Treasury Rate (as hereinafter defined);
and (ii) the amount of principal being prepaid. In no event, however, shall the
Note Prepayment Fee be less than zero dollars ($0.00). For purposes of computing
the Note Prepayment Fee, the term "Enhanced Treasury Rate, shall mean the sum of
(i) fifty (50) basis points; and (ii) the Treasury Rate (as hereinafter
defined). For purposes of computing the Enhanced Treasury Rate, the term
"Treasury Rate" shall mean the bond equivalent yield on securities issued by the
United States Treasury having a maturity equal to the remaining term of the Loan
evidenced hereby, as quoted in Federal Reserve Statistical Release H.15 (519)
----------
under the heading "U.S. Government Securities-Treasury Constant Maturity" for
the date on which prepayment is being made. If this rate is not available as of
the date of prepayment, the Treasury Rate shall be determined by interpolating
between the yield on securities of the next longer and next shorter maturity.
If the Treasury Rate is no longer published, Holder shall reasonably select a
comparable rate. Holder will, upon request, provide an estimate of the amount
of the Note Prepayment Fee two weeks before the date of the scheduled
prepayment.
9. Default Prepayment Fee. Maker agrees that any tender of
----------------------
payment by Maker or any other party of the principal sum evidenced by this Note,
other than as expressly set forth in Section 8 of this Note or as provided for
in Sections 1.04, 1.07 or 1.08 of the Mortgage, shall constitute a prohibited
prepayment hereunder. Maker further agrees that should: (i) any default be made
in the payment of any amount due under this Note, or any other Event of Default
have occurred and (ii) the maturity hereof be accelerated, then a tender of
payment by Maker, or by any entity controlling, controlled by or under common
control
<PAGE>
with, Maker or by anyone on behalf of Maker, of the amount necessary to satisfy
all sums due under the Loan Documents (including, without limitation, any sums
due on any judgment rendered in any foreclosure action, or any amounts necessary
to redeem the Property) made at any time prior to, during, or after, a judicial
foreclosure or a sale pursuant to the exercise of a power of sale of the
Property, shall constitute an evasion of the payment terms hereof and shall be
deemed to be a prohibited prepayment hereunder. Maker acknowledges that Holder
has relied upon the anticipated investment return under this Note in entering
into transactions with, and in making commitments to, third parties; therefore,
the tender of any prohibited prepayment, shall, to the extent permitted by law,
include a "Default Prepayment Fee," equal to the Note Prepayment Fee. Maker
agrees that the Default Prepayment Fee represents the reasonable estimate of
Holder and Maker of a fair average compensation for the loss that may be
sustained by Holder due to the prohibited prepayment of the indebtedness
evidenced by this Note. Such Default Prepayment Fee shall be paid without
prejudice to the right of Holder to collect any other amounts provided to be
paid under the Loan Documents. Nothing herein contained shall constitute an
agreement on the part of Holder to accept any prepayment, other than as
expressly provided in Section 8 of this Note.
10. Liability of Maker. (a) Except for the personal liability and
------------------
guaranty obligations set forth in the Guaranty (as hereinafter defined), and
except as expressly set forth in this Section 10, notwithstanding anything to
the contrary contained in this Note or in any of the other Loan Documents, but
without in any manner releasing, impairing or otherwise affecting this Note or
any of the other Loan Documents, or the validity hereof or thereof, or the lien
of the Mortgage, neither Maker, nor any present or future "Constituent Member"
(as hereinafter defined) in or agent of Maker nor any present or future
shareholder, member, partner, officer, director, employee, trustee, affiliate,
beneficiary, advisor, principal, participant or agent of or in any corporation,
trust or other entity that is or becomes a Constituent Member in Maker, shall
have any personal liability, directly or indirectly, under or in connection with
the Loan, the Loan Documents or any other instrument or certificate executed in
connection with the Loan Documents or any amendment(s) or modification(s) to any
of the foregoing made at any time or times, heretofore or hereafter; the
recourse of Holder, and its successors and assigns, under or in connection with
the Loan, the Loan Documents and such instruments, certificates, amendment(s)
and modification(s), shall be limited to the Mortgaged Property only, and
Holder, on its own behalf and on behalf of its successors and assigns and any
other party, hereby waive any such personal liability. A "Constituent Member"
in Maker shall mean any person or entity that is a partner in or member of
Maker, or any person or entity that, directly or indirectly through one or more
limited liability companies or partnerships, is a partner in or member of Maker.
For purposes of the Loan, the Loan Documents and such instruments and
certificates, and any such amendment(s) or modification(s) thereto, neither the
negative capital account of any Constituent Member in Maker, nor any obligation
of any Constituent Member in Maker, to restore a negative capital account or to
contribute or advance capital to Maker or to any other Constituent Member in
Maker shall at any time be deemed to be the property or an asset of Maker or any
such other Constituent Member (and neither Holder nor any of its successors and
assigns shall have any right to collect, enforce or proceed against or with
respect to any
<PAGE>
such negative capital account or such Constituent Member's obligation to
restore, contribute or advance capital to the applicable limited liability
company or partnership).
(b) Notwithstanding any of the foregoing, nothing contained in this
Section 10 shall be deemed to prejudice the right of Holder following
foreclosure or a deed-in-lieu of foreclosure to (i) recover actual damages
against Copley for fraud, intentional material misrepresentation or intentional
waste; and/or (ii) recover any condemnation proceeds or insurance proceeds or
other similar funds or payments attributable to the Property which have been
intentionally misapplied by Copley (but only to the extent of such intentional
misapplication) or which, under the terms of the Loan Documents, should have
been paid to Holder (but only to the extent of the amount that should have been
paid to Holder), and/or (iii) recover the amount of any tenant security
deposits, prepaid rents or expense recoveries under the Leases (as defined in
the Mortgage) paid to or held by Copley in connection with the Property and not
properly applied or turned over to Holder after foreclosure of the Property or
deed-in-lieu of foreclosure; and/or (iv) recover the rents and revenues received
by Copley from the Property after the occurrence of an Event of Default that is
continuing, which have not been applied to pay any portion of the indebtedness
evidenced by the Note, operating (including leasing) and maintenance expenses of
the Mortgaged Property, Premiums (as defined in the Mortgage), Impositions (as
defined in the Mortgage), deposits into reserve or replacement or other sums
required by the Loan Documents or capital expenditures and repairs; and/or (v)
recover actual damages against Copley, caused by the material breach by Copley
of the covenants, obligations and liabilities, contained in Sections 3.08, 3.11
and 3.17 of the Mortgage. Copley shall be personally, -liable for Copley's
obligations arising in connection with the matters set forth in the foregoing
clauses (i) to (v) inclusive to the extent provided for in said clauses.
Notwithstanding anything to the contrary contained in this Section 10, Copley
shall have personal liability under the Unsecured Indemnity Agreement of even
date herewith.
(c) Notwithstanding anything to the contrary contained in this Section
10, on the date hereof JMB Realty Corporation ("JMB") and Overseas Partners
Capital Corporation ("OPCC"; JMB and OPCC, collectively, the "Guarantors") have
executed and delivered to Holder a Guaranty Agreement (the "Guaranty") by which
such Guarantors have jointly and severally, guaranteed Copley's personal
liability for the matters set forth in Section 10(b) clauses (i) to (v)
inclusive and under the Unsecured Indemnity Agreement, and all costs incurred by
Holder in connection with the recovery of any amounts from Guarantors under the
Guaranty. In the event that (x) JMB transfers its interest in Copley to Urban
Shopping Centers, L.P. ("Urban") in accordance with the Loan Documents, and (y)
Urban delivers to Holder a guaranty, in form, scope and substance substantially
similar to the Guaranty, Holder shall release JMB of its liability under the
Guaranty with respect to matters arising after the date of such delivery.
(d) Copley's obligations arising in connection with the matters set
forth in clauses (b)(i) through (v), above, and under the Unsecured Indemnity
Agreement, are sometimes referred to herein and in the other Loan Documents as
the "Recourse Obligations".
<PAGE>
11. Waiver by Maker. Except to the extent otherwise expressly
---------------
provided in the Mortgage, Maker and all endorsers, guarantors and sureties of
this Note, and each of them, hereby waive diligence, demand, presentment for
payment, notice of non-payment, protest, notice of dishonor and notice of
protest, notice of intent to accelerate and notice of acceleration and
specifically consent to, and waive notice of, any renewals or extensions of this
Note, whether made to or in favor of Maker or any other person or persons, and
hereby waive any defense by reason of extension of time for payment or other
indulgence granted by Holder.
12. Exercise of Rights. No single or partial exercise by Holder, or
------------------
delay or omission in the exercise by Holder, of any right or remedy under the
Loan Documents shall preclude, waive or limit any other or further exercise
thereof or the exercise of any other right or remedy. Holder shall at all times
have the right to proceed against any portion of, or interest in, the Property
in such manner as Holder may deem fit, without waiving any other rights or
remedies with respect to the Property, any portion thereof, or interest therein.
The release of any party under this Note shall not operate to release any other
party liable hereunder or under the other Loan Documents.
13. Fees and Expenses. If this Note is placed in the hands of an
-----------------
attorney at law for collection by reason of default on the part of Maker, Maker
hereby agrees to pay to Holder, in addition to the sums stated above, the
reasonable costs and expenses of collection, including, without limitation, a
reasonable sum as an attorney's fee.
14. No Modifications. This Note may not be changed, amended or
----------------
modified, except in a writing expressly intended for such purpose and executed
by Maker and Holder and consented to in writing by the holder of the Class A
Note.
15. Governing Law. This Note has been prepared and negotiated in the
-------------
Commonwealth of Massachusetts and shall be construed and enforced in all
respects in accordance with the laws of the Commonwealth of Massachusetts.
16. Construction. The words "Maker" and "Holder" shall be deemed to
------------
include the respective heirs, personal representatives, successors and assigns
of each, and shall denote the singular and/or plural, and the masculine and/or
feminine, and natural and/or artificial persons, whenever and wherever the
context so requires. Whenever the term "Maker" is used herein, it shall be
deemed to refer to each Maker individually as well as to both Makers
collectively, provided however, that the term "Maker" shall not include UIDC
after the Notice of Direct Lease is given in accordance with the provisions of
Section 3.14 of the Mortgage. If more than one party is named as Maker, the
obligation hereunder of each such party shall be deemed joint and several. The
captions herein are inserted only for convenience of reference and in no way
define, limit or describe the scope or intent of this Note or any particular
paragraph or section hereof, or the proper construction hereof.
17. Notices. All notices, demands, requests and consents permitted
-------
or required under this Note shall be given in the manner prescribed in the
Mortgage.
<PAGE>
18. Time of the Essence. Time shall be of the essence in this Note
-------------------
with respect to all of Maker's obligations hereunder.
19. Severability. If any provision hereof should be held
------------
unenforceable or void, then such provision shall be deemed separable from the
remaining provisions and shall in no way affect the validity of this Note,
except that if such provision relates to the payment of any monetary sum, then
Holder may, at its option, declare the indebtedness evidenced hereby immediately
due and payable.
20. JURISDICTION AND VENUE; WAIVER OF JURY TRIAL. MAKER HEREBY
--------------------------------------------
ACKNOWLEDGES THAT THE TRANSACTION EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION.
MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B) WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO OBJECT TO JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM
WITHIN THE COMMONWEALTH OF MASSACHUSETTS (INCLUDING FEDERAL COURTS HAVING
JURISDICTION IN THE COMMONWEALTH), AND (II) TO THE RIGHT, IF ANY, TO CLAIM OR
RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN ACTUAL DAMAGES. MAKER AGREES THAT, IN ADDITION TO ANY METHODS OF
SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS SET FORTH ABOVE (OR
SUCH DIFFERENT ADDRESS PROVIDED IN THE MANNER SET FORTH FOR THE GIVING OF
NOTICES UNDER THIS INSTRUMENT), AND SERVICE SO MADE SHALL BE COMPLETE UPON
RECEIPT OR REFUSAL OF RECEIPT OF SUCH NOTICE. MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY JURISDICTION
AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE OBLIGATIONS, THE OTHER LOAN DOCUMENTS, OR ANY CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN MAKER AND HOLDER. THIS WAIVER OF JURY TRIAL SHALL BE
EFFECTIVE FOR EACH AND EVERY DOCUMENT EXECUTED BY MAKER OR HOLDER, AND DELIVERED
TO HOLDER OR MAKER, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENT SHALL
CONTAIN A WAIVER OF JURY TRIAL. MAKER FURTHER CONFIRMS THAT THE FOREGOING
WAIVERS ARE INFORMED AND FREELY MADE.
21. Cross-Default. A default under the Class A Note, or any other
-------------
note now or hereafter secured by the Mortgage constitutes a default under this
Note and under the other Loan Documents. When the default under the Class A
Note, or any such other note
<PAGE>
constitutes an Event of Default under that note, an Event of Default also will
exist under this Note and the other Loan Documents.
22. No Duplication of Payments. Maker and Holder acknowledge and
--------------------------
agree that in no event shall the aggregate amount of the payments of principal
and interest, default interest, late charges, Note Prepayment Fees, Default
Prepayment Fees and any other amounts payable by Maker under this Note
individually and the Class A Note individually exceed the amount of such
principal, interest, fees and amounts which would be payable by Maker if the
Notes were one combined note in the aggregate amount of the Loan. With respect
to monthly installments of principal and interest payable under Paragraph 1,
Maker will be required to pay only one aggregate monthly installment of
principal and interest under the Notes in an amount equal to the Monthly Payment
Amount. At no time shall Maker be required to make payments to more than one
Holder or servicer of the Loan.
23. Counterparts. This Note may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, Maker has executed or caused this Note to be
executed, under seal, by its duly authorized representative(s) the day and year
first above written.
WITNESS/ATTEST: COPLEY PLACE ASSOCIATES, LLC,
a Delaware limited liability company
/s/ Marcia Miller
- -----------------
By: Overseas Partners Capital Corp.,
a Delaware corporation,
its managing member
By: /s/ Bruce M. Barone
-------------------
Its President
Hereunto duly authorized
By: JMB Realty Corporation
an Illinois corporation, its member
By: /s/ Elizabeth Kogen
-------------------
Its Vice President
Hereunto duly authorized
URBAN INVESTMENT AND DEVELOPMENT CO.
an Illinois General Partnership
By: JMB Realty Corporation
an Illinois corporation, its general partner
By: /s/ Elizabeth Kogen
------------------------
Its Vice President
Hereunto duly authorized
<PAGE>
STATE OF Georgia
) Ss:
COUNTY OF Dekalb July 30, 1997
Then personally appeared before me, the above named Bruce M. Barone,
----------------
President of Overseas Partners Capital Corp., a Delaware corporation, manager
- ----------
member of Copley Place Associates, LLC, a Delaware limited liability company,
who executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as the managing member of said limited liability company pursuant to
proper authorization of the members of such limited liability company, and as
the free act and deed of said limited liability company.
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires 12/12/2000
STATE OF New York )
) ss:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen,
Vice President of JMB Realty Corporation, a Delaware corporation, a member of
Copley Place Associates, LLC, a Delaware limited liability company, who executed
the foregoing instrument and acknowledged that he executed the foregoing
instrument as the free act and deed of said corporation in its capacity as a
member of said limited liability company pursuant to proper authorization of the
members of such limited liability company, and as the free act and deed of said
limited liability company.
/s/ Frank S. Caiazzo
--------------------
Notary Public
My Commission Expires: 03/30/1998
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen,
Vice President of JMB Realty Corporation, a Delaware corporation, a member of
Urban Investment and Development Corporation, an Illinois limited partnership,
who executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as the general partner of said partnership company pursuant to proper
authorization of the members of such partnership, and as the free act and deed
of said partnership.
/s/ Frank S. Caiazzo
--------------------
Notary Public
My Commission Expires: 03/30/1998
<PAGE>
EXHIBIT A
Sample illustration of a partial prepayment of the Copley Place Mortgage.
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
7.44% Mortgage Loan
1,355,466 Monthly P&I
Mortgage Loan Cash Flow with Partial Prepayment
-----------------------------------------------
<TABLE>
<CAPTION>
Borrower's Payment Date Balance Total Principal Prepayment Total Interest Total Cash Flow
<S> <C> <C> <C> <C> <C>
7/1/97 195,000,000 - - - -
8/1/97 195,000,000 - - 1,209,000 1,209,000
9/1/97 194,853,534 146,466 - 1,209,000 1,355,466
10/1/97 194,706,161 147,374 - 1,208,092 1,355,466
11/1/97 194,557,873 148,287 - 1,207,178 1,355,465
12/1/97 194,408,666 149,207 - 1,206,259 1,355,466
1/1/98 94,258,534 150,132 100,000,000 1,205,334 101,355,466
2/1/98 93,487,472 771,063 - 584,403 1,355,466
3/1/98 92,711,628 775,843 - 579,622 1,355,465
4/1/98 91,930,975 780,654 - 574,812 1,355,466
5/1/98 91,145,481 785,494 - 569,972 1,355,466
6/1/98 90,355,117 790,364 - 565,102 1,355,466
7/1/98 89,559,853 795,264 - 560,202 1,355,466
8/1/98 88,759,659 800,195 - 555,271 1,355,466
9/1/98 87,954,503 805,156 - 550,310 1,355,466
10/1/98 87,144,355 810,148 - 545,318 1,355,466
11/1/98 86,329,185 815,171 - 540,295 1,355,466
12/1/98 85,508,960 820,225 - 535,241 1,355,466
1/1/99 84,683,650 825,310 - 530,156 1,355,466
2/1/99 83,853,223 830,427 - 525,039 1,355,466
3/1/99 83,017,647 835,576 - 519,890 1,355,466
4/1/99 82,176,891 840,756 - 514,709 1,355,465
5/1/99 81,330,922 845,969 - 509,497 1,355,466
6/1/99 80,479,708 851,214 - 504,252 1,355,466
7/1/99 79,623,216 856,491 - 498,974 1,355,465
8/1/99 78,761,415 861,802 - 493,664 1,355,466
9/1/99 77,894,270 867,145 - 488,321 1,355,466
</TABLE>
<PAGE>
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
7.44% Mortgage Loan
1,355,466 Monthly P&I
Mortgage Loan Cash Flow with Partial Prepayment
-----------------------------------------------
<TABLE>
<CAPTION>
Borrower's Payment Date Balance Total Principal Prepayment Total Interest Total Cash Flow
<S> <C> <C> <C> <C> <C>
10/1/99 77,021,749 872,521 - 482,944 1,355,466
11/1/99 76,143,818 877,931 - 477,535 1,355,466
12/1/99 75,260,444 883,374 - 472,092 1,355,466
1/1/00 74,371,593 888,851 - 466,615 1,355,466
2/1/00 73,477,231 894,362 - 461,104 1,355,466
3/1/00 72,577,324 899,907 - 455,559 1,355,466
4/1/00 71,671,838 905,486 - 449,979 1,355,466
5/1/00 70,760,738 911,100 - 444,385 1,355,466
6/1/00 69,843,989 916,749 - 438,717 1,355,466
7/1/00 68,921,556 922,433 - 433,033 1,355,466
8/1/00 67,993,404 928,152 - 427,314 1,355,466
9/1/00 67,059,497 933,907 - 421,559 1,355,466
10/1/00 66,119,800 939,697 - 415,769 1,355,466
11/1/00 65,174,277 945,523 - 409,943 1,355,466
12/1/00 64,222,892 951,385 - 404,081 1,355,466
1/1/01 63,265,608 957,284 - 398,182 1,355,466
2/1/01 62,302,390 963,219 - 392,247 1,355,466
3/1/01 61,333,199 969,191 - 386,275 1,355,466
4/1/01 60,357,999 975,200 - 380,266 1,355,466
5/1/01 59,376,753 981,246 - 374,220 1,355,466
6/1/01 58,389,423 987,330 - 368,136 1,355,466
7/1/01 57,395,972 993,451 - 362,014 1,355,466
8/1/01 56,396,361 999,611 - 355,855 1,355,466
9/1/01 55,390,553 1,005,808 - 349,657 1,355,466
10/1/01 54,378,509 1,012,044 - 343,421 1,355,466
11/1/01 53,360,190 1,018,319 - 337,147 1,355,466
12/1/01 52,335,557 1,024,632 - 330,833 1,355,466
1/1/02 51,304,572 1,030,985 - 324,480 1,355,466
</TABLE>
<PAGE>
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
7.44% Mortgage Loan
1,355,466 Monthly P&I
Mortgage Loan Cash Flow with Partial Prepayment
-----------------------------------------------
<TABLE>
<CAPTION>
Borrower's Payment Date Balance Total Principal Prepayment Total Interest Total Cash Flow
<S> <C> <C> <C> <C> <C>
2/1/02 50,267,195 1,037,377 - 318,088 1,355,466
3/1/02 49,223,386 1,043,809 - 311,657 1,355,466
4/1/02 48,173,105 1,050,281 - 305,185 1,355,466
5/1/02 47,116,312 1,056,792 - 298,673 1,355,466
6/1/02 46,052,967 1,063,345 - 292,121 1,355,466
7/1/02 44,983,031 1,069,937 - 285,528 1,355,466
8/1/02 43,906,460 1,076,571 - 278,895 1,355,466
9/1/02 42,823,214 1,083,246 - 272,220 1,355,466
10/1/02 41,733,252 1,089,962 - 265,504 1,355,466
11/1/02 40,636,532 1,096,720 - 258,746 1,355,466
12/1/02 39,533,014 1,103,519 - 251,947 1,355,466
1/1/03 38,422,653 1,110,361 - 245,105 1,355,466
2/1/03 37,305,408 1,117,245 - 238,220 1,355,466
3/1/03 36,181,235 1,124,172 - 231,294 1,355,466
4/1/03 35,050,093 1,131,142 - 224,324 1,355,466
5/1/03 33,911,938 1,138,155 - 217,311 1,355,466
6/1/03 32,766,727 1,145,212 - 210,254 1,355,466
7/1/03 31,614,415 1,152,312 - 203,154 1,355,466
8/1/03 30,454,958 1,159,456 - 196,009 1,355,466
9/1/03 29,288,313 1,166,645 - 188,821 1,355,466
10/1/03 28,114,435 1,173,878 - 181,588 1,355,466
11/1/03 26,933,279 1,181,158 - 174,309 1,355,466
12/1/03 25,744,800 1,188,479 - 166,986 1,355,466
1/1/04 24,548,952 1,195,848 - 159,618 1,355,466
2/1/04 23,345,690 1,203,262 - 152,204 1,355,466
3/1/04 22,134,968 1,210,722 - 144,743 1,355,466
4/1/04 20,916,739 1,218,229 - 137,237 1,355,466
5/1/04 19,690,957 1,225,782 - 129,684 1,355,466
</TABLE>
<PAGE>
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
7.44% Mortgage Loan
1,355,466 Monthly P&I
Mortgage Loan Cash Flow with Partial Prepayment
-----------------------------------------------
<TABLE>
<CAPTION>
Borrower's Payment Date Balance Total Principal Prepayment Total Interest Total Cash Flow
<S> <C> <C> <C> <C> <C>
6/1/04 18,457,575 1,233,382 - 122,064 1,355,466
7/1/04 17,216,546 1,241,029 - 114,437 1,355,466
8/1/04 15,967,823 1,248,723 - 106,473 1,355,466
9/1/04 14,711,358 1,256,465 - 99,001 1,355,466
10/1/04 13,447,103 1,264,255 - 91,210 1,355,466
11/1/04 12,175,009 1,272,094 - 83,372 1,355,466
12/1/04 10,895,028 1,279,981 - 75,485 1,355,466
1/1/05 9,607,112 1,287,916 - 67,549 1,355,466
2/1/05 8,311,210 1,295,902 - 59,564 1,355,466
3/1/05 7,007,274 1,303,936 - 51,530 1,355,466
4/1/05 5,695,253 1,312,021 - 43,445 1,355,466
5/1/05 4,375,098 1,320,155 - 35,311 1,355,466
6/1/05 3,046,758 1,328,340 - 27,126 1,355,466
7/1/05 1,710,182 1,336,576 - 18,890 1,355,466
8/1/05 365,320 1,344,863 - 10,603 1,355,466
9/1/05 - 365,320 - 2,265 367,585
10/1/05 - - - - -
11/1/05 - - - - -
12/1/05 - - - - -
1/1/06 - - - - -
2/1/06 - - - - -
3/1/06 - - - - -
4/1/06 - - - - -
5/1/06 - - - - -
6/1/06 - - - - -
7/1/06 - - - - -
8/1/06 - - - - -
9/1/06 - - - - -
</TABLE>
<PAGE>
Sample illustration of a partial prepayment of the Copley Place Mortgage.
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
6.00% Note A
1.44% Strip Interest
Note A Cash Flow
----------------
<TABLE>
<CAPTION>
Borrower's Payment Date Balance Total Principal Total Interest Total Cash Flow
<S> <C> <C> <C> <C>
7/1/97 97,500,000 - - -
8/1/97 97,500,000 - 487,500 487,500
9/1/97 97,353,534 146,466 487,500 633,966
10/1/97 97,206,161 147,374 486,768 634,141
11/1/97 97,057,873 148,287 486,031 634,318
12/1/97 96,908,666 149,207 485,289 634,496
1/1/98 - 96,908,666 484,543 97,393,210
2/1/98 - - - -
3/1/98 - - - -
4/1/98 - - - -
5/1/98 - - - -
6/1/98 - - - -
</TABLE>
<PAGE>
Sample illustration of a partial prepayment of the Copley Place Mortgage.
This is a fictitious example for illustrative purposes only.
This is not a payment schedule of the Mortgage, Note A or Note B.
7.39% Note B (Mortgage Loan Rate less Servicing Fee)
1.39% Strip Interest (Mortgage Loan Rate less Note A Rate Less Servicing Fee)
0.05% Servicing Fee
Note B Cash Flow
-----------------
<TABLE>
<CAPTION>
Note B Cash Flow
Interest Strip
Borrower's Balance Total Principal Interest from A-2 Strip A-1 Strip B-1 Strip Total Interest Total Cash Flow
Payment Note B
Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/1/97 97,500,000 -
8/1/97 97,500,000 - 600,438 112,938 4,063 4,063 721,500 721,500
9/1/97 97,500,000 - 600,438 112,938 4,063 4,063 721,500 721,500
10/1/97 97,500,000 - 600,438 112,768 4,056 4,063 721,324 721,324
11/1/97 97,500,000 - 600,438 112,597 4,050 4,063 721,147 721,147
12/1/97 97,500,000 - 600,438 112,425 4,044 4,063 720,969 720,969
1/1/98 94,258,534 3,241,466 600,438 112,253 4,038 4,063 720,790 3,962,256
2/1/98 93,487,471 771,063 580,475 3,927 584,401 1,355,466
3/1/98 92,711,628 775,843 575,727 3,895 579,622 1,355,466
4/1/98 91,930,974 780,654 570,949 3,863 574,812 1,355,466
5/1/98 91,145,480 785,494 566,142 3,830 569,972 1,355,466
6/1/98 90,355,116 790,364 561,304 3,798 565,102 1,355,466
7/1/98 89,559,853 795,264 556,437 3,765 560,202 1,355,466
8/1/98 88,759,659 800,195 551,539 3,732 555,271 1,355,466
9/1/98 87,954,503 805,156 546,612 3,698 550,310 1,355,466
10/1/98 87,144,355 810,148 541,653 3,665 545,318 1,355,466
11/1/98 86,329,184 815,171 536,664 3,631 540,295 1,355,466
12/1/98 85,508,960 820,225 531,644 3,597 535,241 1,355,466
1/1/99 84,683,650 825,310 526,593 3,563 530,156 1,355,466
2/1/99 83,853,223 830,427 521,510 3,528 525,039 1,355,466
3/1/99 83,017,647 835,576 516,396 3,494 519,890 1,355,466
4/1/99 82,176,891 840,756 511,250 3,459 514,709 1,355,466
5/1/99 81,330,922 845,969 506,073 3,424 509,497 1,355,466
6/1/99 80,479,708 851,214 500,863 3,389 504,252 1,355,466
7/1/99 79,623,218 856,491 495,621 3,353 498,974 1,355,466
8/1/99 78,761,415 861,802 490,346 3,318 493,664 1,355,466
9/1/99 77,894,270 867,145 485,039 3,282 488,321 1,355,466
</TABLE>
Borrower's Balance Total Amount Paid
Payment
Date
7/1/97 1,209,000
8/1/97 1,355,466
9/1/97 1,355,466
10/1/97 1,355,466
11/1/97 1,355,466
12/1/97 101,355,466
1/1/98 1,355,466
2/1/98 1,355,466
3/1/98 1,355,466
4/1/98 1,355,466
5/1/98 1,355,466
6/1/98 1,355,466
7/1/98 1,355,466
8/1/98 1,355,466
9/1/98 1,355,466
10/1/98 1,355,466
11/1/98 1,355,466
12/1/98 1,355,466
1/1/99 1,355,466
2/1/99 1,355,466
3/1/99 1,355,466
4/1/99 1,355,466
5/1/99 1,355,466
6/1/99 1,355,466
7/1/99 1,355,466
8/1/99 1,355,466
9/1/99 1,355,466
<PAGE>
<TABLE>
<CAPTION>
Note B Cash Flow
Interest Strip
Borrower's Balance Total Principal Interest from A-2 Strip A-1 Strip B-1 Strip Total Interest Total Cash Flow
Payment Note B
Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/1/99 77,021,749 872,521 479,699 3,246 482,944 1,355,466
11/1/99 76,143,818 877,931 474,326 3,209 477,535 1,355,466
12/1/99 75,260,444 883,374 468,919 3,173 472,092 1,355,466
1/1/00 74,371,593 888,851 463,479 3,136 486,015 1,355,466
2/1/00 73,477,231 894,362 458,005 3,099 461,104 1,355,466
3/1/00 72,577,324 899,907 452,497 3,062 455,559 1,355,466
4/1/00 71,671,836 905,488 446,955 3,024 449,979 1,355,466
5/1/00 70,760,736 911,100 441,379 2,936 444,365 1,355,466
6/1/00 69,843,989 916,749 435,768 2,948 438,717 1,355,466
7/1/00 68,921,556 922,433 430,123 2,910 433,033 1,355,466
8/1/00 67,993,404 928,152 424,442 2,872 427,314 1,355,466
9/1/00 67,059,497 933,907 416,726 2,833 421,559 1,355,466
10/1/00 66,119,800 939,697 412,975 2,794 415,769 1,355,466
11/1/00 65,174,277 945,523 407,188 2,755 409,943 1,355,466
12/1/00 64,222,892 951,385 401,365 2,716 404,081 1,355,466
1/1/01 63,265,608 957,284 395,508 2,676 398,182 1,355,466
2/1/01 62,302,390 963,219 389,611 2,636 392,247 1,355,466
3/1/01 61,333,199 969,191 383,679 2,596 386,275 1,355,466
4/1/01 60,357,999 975,200 377,710 2,556 380,266 1,355,466
5/1/01 59,376,753 981,246 371,705 2,515 374,220 1,355,466
6/1/01 58,389,423 987,330 365,662 2,474 368,136 1,355,466
7/1/01 57,395,972 993,451 359,582 2,433 362,014 1,355,466
8/1/01 56,396,361 999,611 353,464 2,391 355,855 1,355,466
9/1/01 55,390,553 1,005,808 347,308 2,350 349,657 1,355,466
10/1/01 54,378,509 1,012,044 341,113 2,308 343,421 1,355,466
11/1/01 53,360,190 1,018,319 334,881 2,266 337,147 1,355,466
12/1/01 52,335,557 1,024,632 328,810 2,223 330,633 1,355,466
1/1/02 51,304,572 1,030,985 322,300 2,181 324,480 1,355,466
</TABLE>
Borrower's Balance Total Amount Paid
Payment
Date
10/1/99 1,355,466
11/1/99 1,355,466
12/1/99 1,355,466
1/1/00 1,355,466
2/1/00 1,355,466
3/1/00 1,355,466
4/1/00 1,355,466
5/1/00 1,355,466
6/1/00 1,355,466
7/1/00 1,355,466
8/1/00 1,355,466
9/1/00 1,355,466
10/1/00 1,355,466
11/1/00 1,355,466
12/1/00 1,355,466
1/1/01 1,355,466
2/1/01 1,355,466
3/1/01 1,355,466
4/1/01 1,355,466
5/1/01 1,355,466
6/1/01 1,355,466
7/1/01 1,355,466
8/1/01 1,355,466
9/1/01 1,355,466
10/1/01 1,355,466
11/1/01 1,355,466
12/1/01 1,355,466
1/1/02 1,355,466
<PAGE>
<TABLE>
<CAPTION>
Note B Cash Flow
Interest Strip
Borrower's Balance Total Principal Interest from A-2 Strip A-1 Strip B-1 Strip Total Interest Total Cash Flow
Payment Note B
Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/1/02 50,267,195 1,037,377 315,951 2,138 318,089 1,355,466
3/1/02 49,223,386 1,043,809 309,562 2,094 311,656 1,355,466
4/1/02 48,173,105 1,050,281 303,134 2,051 305,185 1,355,466
5/1/02 47,116,312 1,056,792 296,666 2,007 298,673 1,355,466
6/1/02 46,052,968 1,063,345 290,158 1,963 292,121 1,355,466
7/1/02 44,983,031 1,069,937 283,610 1,919 285,529 1,355,466
8/1/02 43,906,460 1,076,571 277,020 1,874 278,894 1,355,466
9/1/02 42,823,214 1,083,246 270,391 1,829 272,220 1,355,466
10/1/02 41,733,252 1,089,962 263,720 1,784 265,504 1,355,466
11/1/02 40,636,533 1,096,720 257,007 1,739 258,746 1,355,466
12/1/02 39,533,014 1,103,519 250,253 1,693 251,946 1,355,466
1/1/03 38,422,653 1,110,361 243,457 1,647 245,104 1,355,466
2/1/03 37,305,408 1,117,245 236,620 1,601 238,221 1,355,466
3/1/03 36,181,235 1,124,172 229,739 1,554 231,293 1,355,466
4/1/03 35,050,093 1,131,142 222,816 1,508 224,324 1,355,466
5/1/03 33,911,938 1,138,155 215,850 1,460 217,310 1,355,466
6/1/03 32,766,727 1,145,212 208,841 1,413 210,254 1,355,466
7/1/03 31,614,415 1,152,312 201,788 1,365 203,153 1,355,466
8/1/03 30,454,958 1,159,456 194,692 1,317 196,009 1,355,466
9/1/03 29,288,313 1,166,645 187,552 1,269 188,821 1,355,466
10/1/03 28,114,435 1,173,878 180,367 1,220 181,587 1,355,466
11/1/03 26,933,279 1,181,156 173,138 1,171 174,309 1,355,466
12/1/03 25,744,800 1,188,479 165,864 1,122 166,986 1,355,466
1/1/04 24,548,952 1,195,848 158,545 1,073 159,618 1,355,466
2/1/04 23,345,690 1,203,262 151,181 1,023 152,204 1,355,466
3/1/04 22,134,967 1,210,722 143,771 972 144,743 1,355,466
4/1/04 20,916,738 1,218,229 136,315 922 137,237 1,355,466
5/1/04 19,690,957 1,225,782 128,812 872 129,684 1,355,466
</TABLE>
Borrower's Balance Total Amount Paid
Payment
Date
2/1/02 1,355,466
3/1/02 1,355,466
4/1/02 1,355,466
5/1/02 1,355,466
6/1/02 1,355,466
7/1/02 1,355,466
8/1/02 1,355,466
9/1/02 1,355,466
10/1/02 1,355,466
11/1/02 1,355,466
12/1/02 1,355,466
1/1/03 1,355,466
2/1/03 1,355,466
3/1/03 1,355,466
4/1/03 1,355,466
5/1/03 1,355,466
6/1/03 1,355,466
7/1/03 1,355,466
8/1/03 1,355,466
9/1/03 1,355,466
10/1/03 1,355,466
11/1/03 1,355,466
12/1/03 1,355,466
1/1/04 1,355,466
2/1/04 1,355,466
3/1/04 1,355,466
4/1/04 1,355,466
5/1/04 1,355,466
<PAGE>
<TABLE>
<CAPTION>
Note B Cash Flow
Interest Strip
Borrower's Balance Total Principal Interest from A-2 Strip A-1 Strip B-1 Strip Total Interest Total Cash Flow
Payment Note B
Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/1/04 18,457,575 1,233,382 121,263 820 122,084 1,355,466
7/1/04 17,216,546 1,241,029 113,668 769 114,437 1,355,466
8/1/04 15,967,823 1,248,723 106,025 717 106,743 1,355,466
9/1/04 14,711,358 1,256,465 98,335 665 99,001 1,355,466
10/1/04 13,447,103 1,264,255 90,597 613 91,210 1,355,466
11/1/04 12,175,009 1,272,094 82,812 560 83,372 1,355,466
12/1/04 10,895,028 1,279,981 74,978 507 75,485 1,355,466
1/1/05 9,607,112 1,287,916 67,095 454 67,549 1,355,466
2/1/05 8,311,210 1,295,902 59,164 400 59,564 1,355,466
3/1/05 7,007,274 1,303,936 51,183 346 51,530 1,355,466
4/1/05 5,695,254 1,312,021 43,153 292 43,445 1,355,466
5/1/05 4,375,099 1,320,155 35,073 237 35,311 1,355,466
6/1/05 3,046,759 1,328,340 26,943 182 27,126 1,355,466
7/1/05 1,710,183 1,336,576 18,763 127 18,890 1,355,466
8/1/05 365,320 1,344,863 10,532 71 10,603 1,355,466
9/1/05 - 365,320 2,250 15 2,265 1,355,466
</TABLE>
Borrower's Balance Total Amount Paid
Payment
Date
6/1/04 1,355,466
7/1/04 1,355,466
8/1/04 1,355,466
9/1/04 1,355,466
10/1/04 1,355,466
11/1/04 1,355,466
12/1/04 1,355,466
1/1/05 1,355,466
2/1/05 1,355,466
3/1/05 1,355,466
4/1/05 1,355,466
5/1/05 1,355,466
6/1/05 1,355,466
7/1/05 1,355,466
8/1/05 1,355,466
9/1/05 1,355,466
<PAGE>
Exhibit 10 (uuu)
<PAGE>
After recording, please return to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attn: John Busillo, Esq.
LEASEHOLD MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FINANCING STATEMENT
This LEASEHOLD MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING
STATEMENT (this "Mortgage") is made as of the 30th day of July, 1997, by COPLEY
PLACE ASSOCIATES, LLC, a Delaware limited liability company having its principal
place of business c/o Overseas Partners Capital Corp., 115 Perimeter Center
Place, Suite 940, Atlanta, Georgia 30346 (together with its successors and
permitted assigns and any subsequent owner of the Property (as hereinafter
defined), "Copley") and URBAN INVESTMENT AND DEVELOPMENT CO., an Illinois
partnership, having its principal place of business at 900 North Michigan
Avenue, Chicago, Illinois 60611 ("UIDC") (UIDC and Copley being sometimes herein
referred to collectively as "Mortgagor") in favor of METROPOLITAN LIFE INSURANCE
COMPANY as agent for the Holders as defined in the Notes, hereinafter defined)
of the Notes, a New York corporation, having its principal place of business at
One Madison Avenue, New York, New York 10010 ("Mortgagee").
WITNESSETH:
WHEREAS, this Mortgage secures: (1) the full and punctual payment of
the indebtedness evidenced by (a) that certain Class A Promissory Note (the
"Class A Note") of even date with this Mortgage, final payment of which is due
on the first day of August, 2007 (the "Maturity Date"), made by Mortgagor to the
order of Metropolitan Life Insurance Company in the principal face amount of
NINETY SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($97,500,000.00)
and (b) that certain Class B Promissory Note (the "Class B Note") of even date
with this Mortgage, the final payment of which is due on the Maturity Date, made
by Mortgagor to the order of Metropolitan Life Insurance Company in the
principal face amount of NINETY SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100
DOLLARS ($97,500,000.00) (the Class A Note and the Class B Note being referred
to herein collectively as the "Notes") with interest thereon at the rates
therein provided, together with any and all renewals, modifications,
consolidations and extensions of the indebtedness evidenced by the Notes, any
and all additional advances made by Mortgagee to protect or preserve the
Property (as hereinafter defined), any and all future advances as may be made by
Mortgagee, and any other amounts required to be paid by Mortgagor, under any of
the Loan Documents (as hereinafter defined), such indebtedness, advances and
amounts being hereinafter collectively referred to as the "Secured
Indebtedness"; and (2) the full performance by Mortgagor of all of the
provisions, agreements, covenants and obligations contained herein or in any of
the other Loan Documents other than the Unsecured
<PAGE>
Indemnity Agreement of event date herewith executed by Copley in favor of
Mortgagee (the "Indemnity Agreement") and the Guaranty (as hereinafter defined).
The Notes, this Mortgage and any and all other documents, agreements and
certificates evidencing, securing or relating to the Secured Indebtedness
(including, without limitation, the Guaranty and the Indemnity Agreement) and
all renewals, modifications, consolidations and extensions of such documents are
hereinafter collectively referred to as the "Loan Documents."
NOW, THEREFORE, IN CONSIDERATION of the sum of ONE HUNDRED DOLLARS
($100.00), in hand paid, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to secure the
Secured Indebtedness and other obligations of Mortgagor set forth in this
Mortgage and in the other Loan Documents, Mortgagor does hereby bargain, sell,
mortgage, transfer, grant, convey, assign and warrant to Mortgagee, its
successors and assigns, WITH MORTGAGE COVENANTS, all of Mortgagor's right,
title, interest and estate in and to the following property, rights, interests
and estates (collectively, the "Ground Lease Interests"):
(a) The Master Lease (hereinafter defined), and all of UIDC's right,
title, interest, privileges and options created by and under that certain
Amended and Restated Lease described in Exhibit "A-1" attached hereto and made
apart hereof (the "Master Lease"), pertaining to certain real property located
in Boston, Suffolk County, Massachusetts (the "State") as more particularly
described in Exhibit "B-1" attached hereto and made a part hereof, (the "Central
Area Property"), and the leasehold estate created thereby.
(b) The Central Area Sublease (hereinafter defined), and all of
Copley's right, title, interest, privileges and options created by and under
that certain Sublease described in Exhibit "A-2"attached hereto and made apart
hereof (the "Central Area Sublease") pertaining to the Central Area Property,
and the leasehold estate created thereby.
(c) The Dartmouth Street Garage Lease (hereinafter defined), and all
of Copley's right, title, interest, privileges and options created by and under
that certain Lease described in Exhibit A-3 attached hereto and made apart
hereof (the "Dartmouth Street Garage Lease"), pertaining to certain real
property located in Boston, Suffolk County, Massachusetts as more particularly
described in Exhibit "B-2" attached hereto and made a part thereof (the
"Dartmouth Street Property"); and the leasehold estate created thereby:
(d) The Marriott Garage Sublease (hereinafter defined), and all of
Copley's right, title, interest, privileges and options created by and under
that certain Sublease Agreement for Garage Faculties described in Exhibit "A-
4"attached hereto and made apart hereof (the "Marriott Garage Sublease"),
pertaining to certain real property located in Boston, Suffolk County,
Massachusetts as more particularly described in Exhibit "B-3" attached hereto
and made a part hereof, (the "Marriott Parking Garage Property"), and the
leasehold estate created thereby.
The Master Lease, the Central Area Sublease, the Dartmouth Street Garage
Lease and the Marriott Garage Sublease are hereinafter referred to individually
as a "Ground Lease" and collectively as the "Ground Leases". If any Mortgagor
shall acquire the fee title
-2-
<PAGE>
or any other estate, right, title or interest in any property demised by any of
the Ground Leases, or any part thereof, the lien of this Mortgage shall attach
to, cover and be a lien upon such estate, right, title or interest, and such
Mortgagor will promptly execute and deliver to Mortgagee any documentation
reasonably requested by Mortgagee confirming the foregoing.
Together with the following property, rights, interests and estates hereinafter
described (all such Ground Lease Interests and all of the following being
collectively referred to herein as the "Property"):
(1) all right, title, interest and estate of Mortgagor, in and to all
air rights, easements, rights-of-way, gaps, strips and gores of land, streets,
ways, alleys, sewers, sewer rights, waters, water courses, water rights,
privileges, licenses, tenements, hereditaments and appurtenances whatsoever, in
any way appertaining to said real property, whether now owned or hereafter
acquired by Mortgagor, and the reversion(s), remainder(s), possession(s), claims
and demands of Mortgagor in and to the same, and the rights of Mortgagor in and
to the benefits of any conditions, covenants and restrictions now or hereafter
affecting said real property (collectively, with the real property described in
Exhibits "B-1", "B-2" and "B-3", the "Land");
(2) all estate, right, title and interest that Mortgagor now has or
may hereafter acquire in: all things now or hereafter affixed to the Land,
including all buildings, structures and improvements of every kind and
description now or hereafter erected or placed thereon, any fixtures and any and
all machinery, motors, elevators, boilers, equipment (including, without
limitation, all equipment for the generation or distribution of air, water,
heat, electricity, light, fuel or refrigeration or for ventilating or air
conditioning purposes or for sanitary or drainage purposes or for the removal of
dust, refuse or garbage), partitions, appliances, furniture, furnishings,
building service equipment, building materials, supplies, ranges, refrigerators,
cabinets, laundry equipment, kitchen and restaurant equipment, computers and
related nonproprietary software, telephone, cellular and cable equipment and
facilities, radios, televisions, awnings, window shades, venetian blinds, drapes
and drapery rods and brackets, screens, carpeting and other floor coverings,
lobby furnishings, games and recreational equipment, incinerators and other
property of every kind and description now or hereafter placed, attached, fixed
or installed in such buildings, structures, or improvements and all
replacements, repairs, additions, accessions or substitutions or proceeds
thereto or therefor; all of such things whether now or hereafter placed thereon
being hereby declared to be real property and hereinafter collectively referred
to as the "Improvements";
(3) all rights, title and interest of Mortgagor in and to all leases,
subleases, licenses and other agreements affecting the use and occupancy of any
part of the Land or Improvements, any equipment leases or the like pertaining to
the Land or Improvements, and all income, rents, royalties, revenue, issues,
profits, proceeds and other benefits from any and all of the Land and/or
Improvements, including, without limitation, all fees, charges, accounts or
other payments for the use or occupancy of any public facilities which are part
of the Improvements, subject, however, to the right, power and authority
hereinafter expressly
-3-
<PAGE>
conferred upon Mortgagee or reserved to Mortgagor to collect and apply such
income, rents, royalties, revenue, issues, profits, proceeds and other benefits;
(4) all rights, title and interest of Mortgagor in and to all
deposits made with respect to the Land and/or Improvements, including, but not
limited to, any security given to utility companies by Mortgagor, and all
advance payments of insurance premiums made by Mortgagor with respect thereto
and all claims or demands relating to such deposits, other security and/or such
insurance;
(5) all damages, royalties and revenue of every kind, nature and
description whatsoever that Mortgagor may be entitled to receive, either before
or after any Event of Default (as hereinafter defined), from any person or
entity owning or having or hereafter acquiring a right to the oil, gas or
mineral rights and reservations of the Land, with the right in Mortgagee to
receive and apply the same to the Secured Indebtedness;
(6) all rights, title and interest of Mortgagor in and to all
proceeds and claims arising on account of any damage to, or Condemnation (as
hereinafter defined) of, the Land and/or Improvements or any part thereof, and
all causes of action and recoveries for any loss or diminution in the value of
the Land and/or Improvements;
(7) all rights, title and interest of Mortgagor in and to all
licenses (including, but not limited to, any operating licenses, liquor
licenses, food service business, cabaret licenses, entertainment licenses or
similar licenses), contracts, management contracts or agreements, guaranties,
warranties, franchise agreements, permits, authorities or certificates required
or relating to the ownership, use, operation or maintenance of the Land and/or
Improvements and all other permits necessary or appropriate for the Improvements
to be operated as a first-class, upscale, mixed use office/retail complex;
(8) all rights, title and interest of Mortgagor in and to all names
under or by which the Land and/or Improvements may at any time be operated or
known, and all rights to carry on business under any such names or any variant
thereof, and all trademarks, trade names, patents pending and goodwill relating
to the Land and/or Improvements;
(9) all water rights appurtenant to the Land and Improvements
together with all pumping plants, pipes, flumes and ditches, all rights to the
use of water, all rights in ditches for irrigation, all water stock, shares of
stock or other evidence of ownership of any part of the Land or Improvements
that is owned by Mortgagor in common with others and all documents of membership
in any owners' or members' association or similar group having responsibility
for managing or operating any part of the Land and/or Improvements;
(10) to the extent assignable, all rights, title and interest of
Mortgagor in and to all plans and specifications prepared for construction of
the Improvements and all studies, data and drawings related thereto; and, all
contracts and agreements of Mortgagor relating to the aforesaid plans and
specifications or to the aforesaid studies, data and drawings, or to the
construction of the Improvements;
-4-
<PAGE>
(11) all rights, title and interest of Mortgagor in and to all
furnishings, inventories, equipment, goods, accounts, general intangibles,
documents, instruments and chattel paper, including without limitation, all
accounts. additional revenue, proceeds of sales, or income of any kind derived
from the Land and/or the Improvements, whether cash or credit, derived directly
or indirectly from any source including, without limitation: fees, charges,
accounts or other payments for the use or occupancy of any public facilities
which are part of the Improvements; food and beverage sales; sales from gift or
other shops managed directly by Mortgagor or any agent of Mortgagor; telephone
usage; net vending income (gross vending revenue reduced by the amount payable
to equipment vendors for the use thereof); commissions; the rental of space in
the Real Property and the Improvements to third parties; rentals of cars,
bicycles, and other items; all net revenue received from any third party
concessionaires operating any concession under any agreement with Mortgagor or
its agents, and from other persons occupying space at the Real Property and the
Improvements and/or rendering services to occupants at the Real Property and the
Improvements; any form of incentive payments or awards from any source
whatsoever which are attributable to the operation of the Real Property and the
Improvements; and payments received by Mortgagor pursuant to business
interruption insurance;
(12) all the estate, right, title and interest of Mortgagor, now owned
or hereafter acquired, with respect to any parking facilities located other than
on the Land and used or intended to be used in connection with the operation,
ownership or use of the land or Improvements, any and all replacements and
substitutions for the same, and any other parking rights, easements, leases,
covenants and other interests in parking facilities acquired by Mortgagor for
the use of tenants or occupants of the Improvements;
(13) as a secured party, a security interest in Mortgagor's interest
in any portion of the above-described property which may be construed to be
personal property and in all other personal property of every kind and
description, whether now existing or hereafter acquired, now or at any time
hereafter attached to, erected upon, situated in or upon, forming a part of,
appurtenant, to, used or useful in the construction or operation of or in
connection with, or arising from the use or enjoyment of all or any portion of,
or from any lease or agreement pertaining to, the Land or the Improvements;
(14) all estates, rights and interests of Mortgagor in and to the
Management Agreements (as defined in Section 3.13 hereof) and all of the
payments paid or owing to Mortgagor by the Management Companies (as defined in
Section 3.13 hereof) pursuant to the terms of the Management Agreements;
(15) all substitutions and replacements of, and accessions and
additions to, any of the foregoing; and
(16) all cash and non-cash proceeds of any of the foregoing,
including, without limitation, proceeds of any voluntary or involuntary
disposition or claim respecting any of the foregoing (pursuant to judgment,
condemnation award or otherwise) and all goods,
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documents, general intangibles, chattel paper and accounts, wherever located,
acquired with cash proceeds of any of the foregoing or proceeds thereof.
All property referred to in the foregoing granting clause which, by
its nature, is personal property is sometimes hereinafter collectively referred
to as "Personal Property." All other property so referred to is hereinafter
sometimes collectively referred to as "Real Property."
TO HAVE AND TO HOLD the Property, for the benefit of Mortgagee, its
successors and assigns, subject, however, to the terms, covenants and conditions
contained herein.
PROVIDED, HOWEVER, if Mortgagor shall pay or cause to be paid to
Mortgagee in full the Secured Indebtedness, at the times and in the manner
stipulated in the Loan Documents, and shall keep, perform and observe all and
singular the covenants and promises of Mortgagor in the Loan Documents, then
this Mortgage and all the properties, interests and rights hereby granted,
encumbered, transferred or assigned shall be released by Mortgagee in accordance
with the laws of the State.
MORTGAGOR HEREBY COVENANTS AND AGREES FOR THE BENEFIT OF MORTGAGEE AS
FOLLOWS:
ARTICLE I - COVENANTS
1.01 PERFORMANCE BY MORTGAGOR. Mortgagor shall pay the Secured
Indebtedness to Mortgagee and shall keep and perform each and every other
obligation, covenant and agreement of the Loan Documents (subject to applicable
notice and grace provisions, if any, in the Loan Documents).
1.02 WARRANTY OF TITLE. Each Mortgagor warrants that it owns its
respective tenant's interests in the Ground Leases as set forth in Exhibits A-1,
A-2, A-3 and A-4, and that it has good right and is lawfully authorized to
transfer all of its right, title and interest in, and to encumber the Property,
subject only to those matters set forth in Exhibit "C" attached hereto and made
a part hereof (the "Permitted Exceptions"). Mortgagor further covenants to
warrant and forever defend all and singular the Property unto Mortgagee forever
from and against all persons whomsoever claiming the same or any part thereof.
1.03 TAXES, LIENS AND OTHER CHARGES. Unless sums sufficient to pay
the same shall have been fully paid to Mortgagee as provided in Section 1.06
hereof, Mortgagor shall pay or cause to be paid all real estate and other taxes,
assessments, water and sewer charges, vault and other license or permit fees,
levies, fines, penalties, interest, impositions, and other similar claims,
general and special, public and private, of any kind whatsoever which may be
assessed, levied, confirmed, imposed upon or arise out of or become due and
payable out of, or become a lien on or against the Property or any part thereof
(all of the foregoing, together with utility and refuse removal charges, being
hereinafter collectively referred to as the "Imposition(s)") not later than
thirty (30) days before
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the dates on which such Impositions would become delinquent. Not later than the
date when any Impositions would become delinquent, Mortgagor shall produce to
Mortgagee evidence reasonably satisfactory to Mortgagee evidencing the payment
thereof in full. If Mortgagor shall in good faith, and by proper legal action,
contest any Impositions, and shall have deposited cash with Mortgagee (or as
Mortgagee may direct) as a reserve for the payment thereof plus all fines,
interest, penalties and costs which may become due pending the determination of
such contest, in such amount as Mortgagee may require, then Mortgagor shall not
be required to pay the same during the maintenance of said deposit and as long
as such contest operates to prevent enforcement or collection of such
Impositions against, or the sale or forfeiture of, the Property for non-payment
thereof, and is prosecuted with due diligence and continuity, and shall not have
been terminated or discontinued adversely to Mortgagor. Upon termination of any
such proceeding or contest, Mortgagor shall pay the amount of such Impositions
or part thereof as finally determined in such proceeding or contest. However,
if monies have been deposited with Mortgagee pursuant to this Section 1.03, said
funds shall be applied toward such payment and the excess, if any, shall be
returned to Mortgagor.
1.04 FURTHER TAXES. In the event of the passage, after the date of
this Mortgage, of any law deducting from the value of the Property, for the
purposes of taxation, any lien thereon or security interest therein, or changing
in any way the laws now in force for the taxation of mortgages, deeds of trust
and/or security agreements or debts secured by mortgages, deeds of trust and/or
security agreements, or the manner of the collection of any such taxes, which
has the effect of imposing payment of the whole or any portion of any taxes,
assessments or other similar charges against the Property upon Mortgagee, the
Secured Indebtedness shall become due and payable at the option of Mortgagee
upon ninety (90) days written notice to Mortgagor; provided, however, that such
election by Mortgagee shall be ineffective if prior to the elapse of such 90-day
period: (1) Mortgagor is permitted by law (including, without limitation,
applicable interest rate laws) to, and actually does, pay such tax or the
increased portion thereof (in addition to continuing to pay the Secured
Indebtedness as and when due and payable); and (2) Mortgagor agrees with
Mortgagee in writing to pay, or reimburse Mortgagee for the payment of, any such
tax or increased portion thereof when thereafter levied or assessed against the
Property or any portion thereof. Any money paid by Mortgagee under this Section
1.04 shall be reimbursed to Mortgagee in accordance with Section 3.10 hereof.
If the Loan is accelerated pursuant to this Section 1.04 Note Prepayment Fee
shall be payable in connection therewith.
1.05 INSURANCE.
(a) Mortgagor, at its sole cost and expense, shall at all times,
unless otherwise indicated, provide, maintain and keep in force:
(1) property insurance covering the Improvements and
Personal Property against loss or damage from such causes of loss as are
embraced by insurance policies of the type now known as "All Risks" or "Open
Perils" property insurance on a replacement cost basis with an Agreed Value
Endorsement waiving co-insurance and including
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contingent liability from operation of Building Laws, all in an amount not less
than one hundred percent (100%) of the then full replacement cost of the
Improvements (exclusive of the cost of excavations, foundations. underground
utilities and footings below the lowest basement floor) and Personal Property,
without deduction for physical depreciation thereof. Such insurance shall
provide for no deductible in excess of $10,000, except for a $25,000 deductible
for flood and earthquake. In addition, such property insurance shall include a
Demolition and. Increased Cost of Construction Endorsement and a Replacement
Cost Endorsement as well as such other insurance as Mortgagee may from time to
time designate to cover other risks and hazards affecting the Property. If the
Improvements or the use of the Property shall constitute non-conforming
structures or uses, an "Ordinance or Law Coverage" endorsement shall be
required. Full replacement cost shall be determined from time to time by an
appraiser or contractor designated and paid by Mortgagor and reasonably approved
by Mortgagee, or by an engineer or appraiser in the regular employ of the
insurer;
(2) business income insurance insuring against loss of
business or rental income of the Property, in an amount sufficient to prevent
Mortgagor from becoming a co-insurer within the terms of the applicable
policies, and sufficient to recover one year's "business income" for the
Property. The current estimate of one year's "business income" for the Property
is $45,,000,000. "Business income" as used herein is defined as the sum of (i)
the total anticipated gross income from occupancy of the Property, (ii) the
amount of all charges (such as, but not limited to, operating expenses,
insurance premiums and taxes) which are the obligation of tenants or occupants
to Mortgagor pursuant to leases or other occupancy agreements, except to the
extent included in (i) above, (iii) the fair market rental value of any portion
of the Property which is occupied by Mortgagor,, and (iv) any other amounts
payable to Mortgagor or any affiliate of Mortgagor pursuant to leases or other
occupancy agreements;
(3) flood insurance meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, in an amount equal to the lesser of the
outstanding principal balance of the Notes, or the maximum amount of insurance
which is available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, as amended.
(4) boiler and machinery insurance insuring against
loss or damage to the Property and to the major components of any central
heating, air conditioning or other ventilation systems, boilers, other pressure
vessels, high pressure piping and machinery, elevators and escalators, if any,
and/or such other similar machinery or equipment as may be now or hereafter
installed in the Improvements, in an amount equal to 100% of the full
replacement cost of all equipment installed at the Improvements. These policies
shall insure against physical damage to and loss of occupancy and use of the
Improvements arising out of a covered accident or breakdown;
(5) upon the request of Mortgagee, builder's risk
insurance insuring against loss of damage from such causes of loss as are
embraced by insurance policies of the type now known as "Builder's Risks"
property insurance (written on an "all risk" or "open
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perils" basis), including, without limitation, fire and extended coverage and
collapse of the improvements coverage to agreed limits, all in form and
substance acceptable to Mortgagee and (i) as to property then subject to
Restoration (as defined in Section 1.07(b)) or any restoration accomplished in
connection with a Condemnation, in an amount not less than the full replacement
cost of such property and (ii) as to any additional improvements then being
constructed, in an amount not less than the completed value on a nonreporting
form, of the additional improvements then being constructed; provided, however,
that such insurance in clauses (i) and (ii) above shall be required only during
any period of Restoration or any restoration accomplished in connection with a
Condemnation or any period of construction of any additional improvements;
(6) general liability insurance insuring against claims
for personal injury (including, without limitation, bodily injury or death),
property damage liability and such other loss or damage from such causes of loss
as are embraced by insurance policies of the type now known as "Commercial
General Liability" insurance. Such insurance coverage shall be issued and
maintained on an "occurrence" basis with a combined single limit of not less
than $25,000,000, such limit being subject to change by Mortgagee in writing by
reason of changed economic conditions making this protection inadequate. Such
provisions shall cover at least the following hazards: premises and operations,
products and completed operations on an "if any" basis, independent contractors,
blanket contractual liability for all written and oral contracts, and
contractual liability covering the indemnities contained in this Mortgage and
the other Loan Documents to the extent available;
(7) worker's compensation insurance, subject to the
statutory limits of the State, and employer's liability insurance with a limit
of at least $1,000,000 per accident and per disease per employee, and $1,000,000
for disease aggregate in respect of any award or operations on or about the
Property, or in connection with the Property or its operations (if applicable);
and
(8) such other insurance and in such amounts, as may,
from time to time, be reasonably required by Mortgagee against other insurable
hazards or risks, including, but not limited to, environmental impairment
liability coverage, nuclear reaction or radioactive contamination coverage,
vandalism, sinkhole and mine subsidence and/or earthquake coverage, which
hazards or risks at the time are commonly insured against, and provided such
insurance is generally available, for property similarly situated in the Boston,
Massachusetts area and Mortgagee is customarily requiring such insurance for
similar properties (unless different circumstances warrant different treatment
of the Property), due regard being given to the height and type of building, its
construction, use and occupancy.
(b) Except as herein expressly provided otherwise, all
policies of insurance required under this Section 1.05 shall be issued by
companies, and be in form, amount, and content and have an expiration date,
approved by Mortgagee and as to the policies of insurance required under
subparagraphs (1), (3) and (6) of Section 1.05(a), shall contain a Standard
NonContributory Mortgagee Clause or Lender's Loss Payable Endorsement, or
equivalents thereof, in form, scope and substance satisfactory to Mortgagee, in
favor of Mortgagee and/or
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its successors and assigns, and as to policies of insurance required under
subparagraphs (1), (2), (4), (5) and (6) of Section 1.05(a), shall provide that
the proceeds thereof ("Insurance Proceeds") shall be payable to Mortgagee. Any
Insurance Proceeds received by Mortgagee pursuant to Section 1.05(a)(2) shall be
held and applied by Mortgagee toward payment of that portion of the Secured
Indebtedness then due and payable, or which will become due and payable for the
period for which such Insurance Proceeds are received by Mortgagee and the
remainder, if any, shall be paid to Mortgagor. Except for claims of Five
Hundred Thousand and 00/100 Dollars ($500,000.00) or less (which Mortgagor shall
have the right to settle without involvement of Mortgagee), Mortgagor shall not
settle, adjust or compromise any other claims for loss, damage or destruction to
the Property, regardless of whether there are Insurance Proceeds available or
whether any such proceeds are sufficient in amount to fully compensate for such
loss or damage without the prior written consent of Mortgagee, which Mortgagee
may withhold in its reasonable discretion. Mortgagee shall be furnished with
the original or certified copy of each policy required hereunder together with
certificates of insurance satisfactory to Mortgagee, which policy or certificate
shall provide that it shall not be modified or canceled without ten (10) days'
prior written notice to Mortgagee. At least thirty (30) days prior to
expiration of any policy required hereunder, Mortgagor shall furnish Mortgagee
appropriate proof of issuance of a policy continuing in force the insurance
covered by the policy so expiring. Not later than thirty (30) days before the
dates on which any insurance provisions would become delinquent, Mortgagor shall
furnish Mortgagee receipts for the payment of premiums on such insurance
policies or other evidence of such payment reasonably satisfactory to Mortgagee
in the event that such premiums have not been paid to Mortgagee pursuant to
Section 1.06 hereof. In the event that Mortgagor does not deposit with
Mortgagee a new policy of insurance (or certified copy thereof) with evidence of
payment of premiums thereon at least two (2) business days prior to the
expiration of any policy, then Mortgagee may, but shall not be obligated to,
procure such insurance and pay the premiums therefor and any money paid by
Mortgagee for such premiums shall be reimbursed to Mortgagee in accordance with
Section 3. 10 hereof.
(c) In the event of the foreclosure of this Mortgage or other
transfer of the title to the Property in extinguishment, in whole or in part, of
the Secured Indebtedness, all right, title and interest of Mortgagor in and to
any insurance policy (to the extent assignable) or Premium (as hereinafter
defined) or payments in satisfaction of claims or any other rights thereunder
then in force, shall pass to the purchaser or grantee. Nothing contained herein
shall prevent accrual of interest as provided in the Note on any portion of the
Secured Indebtedness to which the Insurance Proceeds are to be applied until
such time as the Insurance Proceeds are actually received by Mortgagee and
applied by Mortgagee to reduce the Secured Indebtedness.
(d) All insurance companies issuing the insurance policies
required herein must be authorized to do business in New York State and in the
State and must be approved by Mortgagee in its reasonable discretion. Such
insurance companies must have a general policy rating of A or better and a
financial class of X or better by A.M. Best Company, Inc. and a claims paying
ability of BBB or better according to Standard & Poor's (as hereinafter
defined). If there are any "Securities" (as defined in Section 3.16) issued
which have been assigned a
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rating by a Rating Agency (as defined in Section 3.16), the insurance company
shall have a claims paying ability rating by such Rating Agency equal to or
greater than the rating of the highest class of the Securities.
1.06 ESCROW DEPOSITS. Without limiting the effect of Sections 1.03,
1.04 and 1.05 hereof, Mortgagor shall pay to Mortgagee monthly on the Payment
Date (as defined in the Notes), an amount equal to 1/12th of what Mortgagee
estimates is necessary to pay, on an annualized basis, all (1) Impositions and
(2) premiums for the insurance policies required under Section 1.05(a) hereof
("Premiums") to enable Mortgagee to pay same at least thirty (30) days before
the Impositions would become delinquent and the Premiums are due, and, on
demand, from time to time shall pay to Mortgagee additional sums necessary to
pay the Premiums and Impositions. No amounts so paid shall be deemed to be
trust funds, but may be commingled with the general funds of Mortgagee, and no
interest shall be payable thereon (unless such deposits are required by a
Rating Agency in connection with a Securitization (as defined in Section 3.16)
and no Event of Default has occurred, in which event interest shall be payable
thereon at a rate equal to the short-term AAA rated money-market fund at the
depository institution reasonably selected by Mortgagee. In the event that
Mortgagor does not pay such sums for Premiums and Impositions, then Mortgagee
may, but shall not be obligated to, pay such Premiums and Impositions and any
money so paid by Mortgagee shall be reimbursed to Mortgagee in accordance with
Section 3. 10 hereof. If an Event of Default occurs, Mortgagee shall have the
right, at its election, to apply any amounts so held under this Section 1.06
against all or any part of the Secured Indebtedness, or in payment of the
Premiums or Impositions for which the amounts were deposited. Mortgagor will
furnish to Mortgagee bills for Impositions and Premiums thirty (30) days before
Impositions become delinquent and such Premiums become due. Notwithstanding
the foregoing, if, in connection with a Securitization, Mortgagee is notified
that such escrow deposits are no longer required or if there ceases to be a
Securitization, Mortgagee will not require such escrow deposits unless and
until (i) an Event of Default occurs or (ii) with respect to Premiums,
Mortgagor fails to furnish to Mortgagee, not later than two (2) business days
before the dates on which any Premiums would become delinquent, receipts for
the payment of such Premiums or appropriate proof of issuance of a new policy
which continues in force the insurance coverage of the expiring policy.
1.07 RESTORATION.
(a) After the happening of any casualty to the Property, whether or
not required to be insured against under the insurance policies to be provided
by Mortgagor hereunder, Mortgagor shall give prompt written notice thereof to
Mortgagee generally describing the nature and cause of such casualty and the
extent of the damage to or destruction of the Property.
(b) Mortgagor hereby assigns to Mortgagee all Insurance Proceeds
which Mortgagor may be entitled to receive. In the event of any damage to or
destruction of the Property, and provided (1) a Default (as defined in Exhibit
"D" annexed hereto and made a part hereof) or an Event of Default does not
currently exist, and (2) Mortgagee has determined
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that (i) its security has not been materially impaired, and (ii) the repair,
restoration and rebuilding of any portion of the Property that has been
partially damaged or destroyed can be accomplished within twelve (12) months
from the date of such damage or destruction in full compliance with all
Requirements for Restoration (as defined in Exhibit "E") to the same condition,
character and general utility as nearly as possible to that existing prior to
such damage or destruction and at least equal value as that existing prior to
such damage or destruction (the "Restoration"), then Mortgagor shall commence
and diligently pursue to completion the Restoration. Mortgagee shall hold and
disburse the Insurance Proceeds less (x) the reasonable cost, if any, to
Mortgagee of recovering such proceeds including, without limitation, attorneys'
fees and expenses, adjusters' fees and fees incurred in Mortgagee's performance
of its obligations hereunder, and (y) any insurance proceeds received by
Mortgagee pursuant to Section 1.05(a)(2) (the "Net Insurance Proceeds") in the
manner hereinafter provided, to the Restoration. In the event that the above
conditions for Restoration have not been met, Mortgagee may, at its option.
apply the Net Insurance Proceeds to the reduction of the Secured Indebtedness in
such order as Mortgagee may determine and Mortgagee may declare the entire
Secured Indebtedness immediately due and payable.
(c) In the event the Net Insurance Proceeds are to be used for the
Restoration, Mortgagor shall comply with Mortgagee's Requirements For
Restoration as set forth in Exhibit "E" attached hereto and made a part hereof.
Upon Mortgagee's receipt of a final certificate of occupancy or other evidence
of approval of appropriate governmental authorities for the use and occupancy of
the Improvements and other evidence requested by Mortgagee that the Restoration
has been completed and the costs thereof have been paid in full, and
satisfactory evidence that no mechanic's or similar liens for labor or material
supplied in connection with the Restoration are outstanding against the Property
and provided that an Event of Default does not currently exist, Mortgagee shall
pay any remaining Restoration Funds (as defined in Exhibit "E") then held by
Mortgagee to Mortgagor; provided, however, nothing contained herein shall
prevent Mortgagee from applying at any time the whole or any part of the
Restoration Funds to the curing of any Event of Default.
(d) In the event that Mortgagee applies all or any portion of the
Restoration Funds to repay the unpaid Secured Indebtedness as provided in this
Section 1.07, after payment in full of the Secured Indebtedness, any remaining
Restoration Funds shall be paid to Mortgagor.
1.08 CONDEMNATION. Should the Property or any part thereof be taken
by reason of any condemnation or similar eminent domain proceeding, or a grant
or conveyance in lieu thereof ("Condemnation"), Mortgagee shall be entitled to
all compensation, awards and other payments or relief therefor, and shall have
the option (but not the obligation), upon written notice to Mortgagor, to
commence, appear in and prosecute in its own name any action or proceeding or to
make any compromise or settlement in connection with such Condemnation. In
connection with the election of any such option by Mortgagee, Mortgagor hereby
irrevocably constitutes and appoints Mortgagee as its attorney-in-fact upon an
Event of Default, and such appointment is coupled with an interest, to commence,
appear in and prosecute any action or proceeding or to make any compromise or
settlement in
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connection with any such Condemnation. All such compensation, awards, damages,
rights of action and proceeds (collectively, the "Condemnation Proceeds") are
hereby assigned to Mortgagee, who shall, after deducting therefrom all its
reasonable expenses, including attorneys' fees ("Condemnation Expenses"), apply
the remaining Condemnation Proceeds to repair any damage to, and to restore the
Improvements remaining on the portion of, the Property not taken (such repair
and restoration to be performed by Mortgagor) in the manner provided in Section
1.07 with respect to disposition of Net Insurance Proceeds; provided, however,
that at the time of application of the remaining Condemnation Proceeds: (1)
there shall not exist any Default or Event of Default; (2) Mortgagor shall have
paid to Mortgagee all sums in excess of available Condemnation Proceeds
necessary to repair any damage to and restore the Improvements remaining on the
portion of the Property not taken; and (3) Mortgagee shall have determined that
its security is not impaired and that such repair and restoration can be
accomplished within twelve (12) months from the date of taking. After
restoration of the remaining Improvements, or in the event the conditions
precedent for such restoration are not met, Mortgagee shall have the right,
after deducting therefrom the Condemnation Expenses, to apply the balance of the
Condemnation Proceeds to the Secured Indebtedness, in such manner and such order
as Mortgagee in its sole discretion shall determine, without adjustment in the
dollar amount of the installments due under the Note. Nothing contained herein
shall prevent the accrual of interest as provided in the Note on any portion of
the Secured Indebtedness to which the Condemnation Proceeds are to be applied
until such Condemnation Proceeds are actually received by Mortgagee and so
applied to reduce the Secured Indebtedness.
1.09 CARE AND USE OF THE PROPERTY.
(a) Mortgagor, at its sole cost and expense, shall keep the Property
in good order, condition, and repair, and make all necessary repairs thereto,
interior and exterior, structural and non-structural, ordinary and
extraordinary, and foreseen and unforeseen. Mortgagor shall abstain from, and
not permit, the commission of waste in or about the Property and shall not
remove or demolish, or alter in any substantial manner, the structure or
character of any Improvements without the prior written consent of Mortgagee.
(b) Mortgagor shall at all times comply with all present or future
Requirements (as defined in Exhibit "D") affecting or relating or pertaining in
any way to the Property and/or the use, operation and/or the maintenance
thereof, and shall furnish Mortgagee, on request, proof of such compliance.
Mortgagor shall not use or permit the use of the Property, or any part thereof,
for any illegal purpose.
(c) Mortgagee and Mortgagee's representatives and designees shall
have the right, but not the duty, to enter the Property at reasonable times to
inspect the same. Mortgagee shall not be liable to Mortgagor or any person in
possession of the Property with respect to any matter arising out of such entry
to the Property except for any matter resulting from Mortgagee's, or its agents'
or designees', gross negligence or willful disregard of its obligations
hereunder.
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(d) Mortgagor shall, from time to time, if and when required by
Mortgagee (1) perform a site investigation of the Property to determine the
existence and levels of Hazardous Substances (as defined in Exhibit "D") on the
Property, (2) issue a report certifying the. results of such inspection to
Mortgagee, and (3) take such remedial action as may be required to bring the
Property into compliance with applicable law; provided, however, that unless any
Event of Default shall have occurred or there are reasonable grounds to suspect
environmental harm, Mortgagor shall not be required to undertake a site
investigation. The foregoing proviso shall not, however, limit in any way
Mortgagee's right to enter upon the Property at all reasonable times and upon
reasonable prior notice to undertake site investigations of the Property at
Mortgagee's expense.
(e) Mortgagor shall use, or cause to be used, the Property
continuously as and for a first class, upscale, mixed use, office/ retail
complex. Mortgagor shall not use, or permit the use of, the Property for any
other use without the prior written consent of Mortgagee. Mortgagor shall at no
time file or record a Declaration of Condominium, Master Deed of Trust or any
other similar document evidencing the imposition of a so-called "condominium
regime" whether superior or subordinate to this Mortgage. Mortgagor shall at no
time permit any part of the Property to be converted to, or operated as, a so-
called "cooperative apartment house" (or on a like cooperative basis) whereby
the tenants or occupants thereof participate in the ownership, management or
control of any part of the Property, as tenants, stockholders or otherwise.
(f) Mortgagor shall not initiate or acquiesce in a change in the
zoning classification of and/or restrictive covenants affecting the Property or
seek any variance under existing zoning ordinances applicable to the Property or
use or permit the use of the Property in such a manner which would result in
such use becoming a non-conforming use under applicable zoning ordinances or
other applicable laws, ordinances, rules or regulations or subject the Property
to restrictive covenants without Mortgagee's prior written consent, which
consent will not be unreasonably withheld.
1. 10 LEASES AND OTHER AGREEMENTS AFFECTING THE PROPERTY.
(a) In order to further secure payment of the Secured-Indebtedness
and the observance, performance and discharge of Mortgagor's obligations under
the Loan Documents, Mortgagor hereby assigns to Mortgagee all of Mortgagor's
right, title, interest and estate in, to and under all of the leases, subleases
and other occupancy agreements (collectively, the "Leases") now or hereafter
affecting the Property or any part thereof and in and to all of the Rents and
Profits (as defined in Exhibit "D"). Unless and until an Event of Default
occurs, Mortgagor shall be entitled to collect the Rents and Profits as and when
they become due and payable. Mortgagee shall be liable to account only for the
Rents and Profits actually received by Mortgagee pursuant to any provision of
any Loan Document.
(b) Mortgagor shall duly and punctually perform in all material
respects all terms, covenants, conditions and agreements binding upon it or the
Property under any
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agreement or instrument of any nature whatsoever which involves or affects the
Property or any part thereof , including, without limitation, the Management
Agreements and the Ground Leases. Mortgagor represents that it has heretofore
furnished Mortgagee true and complete copies of all executed Leases existing on
the date of this Mortgage. Upon request of Mortgagee, Mortgagor agrees to
furnish Mortgagee with executed copies of all Leases hereafter entered into with
respect to all or any part of the Property.
(c) Mortgagor shall not, without the express written consent of
Mortgagee, which consent shall not be unreasonably withheld, enter into any new
Lease or modify, extend or renew, either orally or in writing, any Lease now
existing or hereafter created upon the Property, or any part thereof, unless
such new Lease or amendment, extension or renewal shall be in compliance with
the Leasing Guidelines (as defined in Exhibit "D"). Mortgagor shall not,
without the express written consent of Mortgagee, which consent shall not be
unreasonably withheld, terminate or surrender any Lease now existing or
hereafter created upon the Property, or any part thereof, unless (a) tenant is
in material default under the Lease, or (b) Mortgagor has entered into a new
Lease covering all of the leased premises to be terminated or surrendered, which
new Lease shall either have been approved by Mortgagee as provided herein, or
shall be in compliance with the Leasing Guidelines. Mortgagor shall not permit
an assignment or sublease of any Lease now existing or hereafter created upon
the Property, or any part thereof, without the express written consent of
Mortgagee, which consent shall not be unreasonably withheld unless such Lease
shall be in compliance with the Leasing Guidelines.
(d) Each Lease of any portion of the Property hereinafter entered into
shall be absolutely subordinate to the lien of this Mortgage, but shall also
contain a provision, satisfactory to Mortgagee, that in the event of the
exercise of the power of sale hereunder or a sale pursuant to a judgment of
foreclosure, such Lease, at the sole and exclusive option of the purchaser at
such sale, shall not be terminated and the tenant thereunder shall atone to such
purchaser and, if requested to do so, shall enter into a new Lease for the
balance of the term of such Lease then remaining, upon the same terms and
conditions. If Mortgagee so requests, Mortgagor shall cause the tenant under
each or any of such Leases to enter into subordination, non-disturbance and
attornment agreements with Mortgagee substantially in the form annexed as
Exhibit F.
(e) Mortgagor shall not accept payment of advance rents or security
deposits equal, in the aggregate, to more than one (1) month's rent.
(f) Mortgagee shall provide a subordination, non-disturbance and
attornment agreement substantially in the form of Exhibit F. to any tenant under
a Lease hereafter executed, if requested by such tenant, provided that such
Lease shall comply with the Leasing Guidelines. Any tenant to whom such non-
disturbance is granted shall execute a subordination, non-disturbance and
attornment agreement substantially in the form attached hereto as Exhibit 'F".
In addition, Mortgagee agrees that, as to any Leases existing on the date
hereof, if requested by the tenant thereunder, Mortgagee will enter into a
subordination
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non-disturbance and attornment agreement substantially. in the form attached
hereto as Exhibit "F", provided that such Lease requires such an agreement as a
condition to subordination.
(g) Mortgagor covenants and agrees that all contracts and agreements
relating to the Property to pay leasing commissions, management fees or other
compensation shall (1) provide that the obligation to pay such commissions, fees
and other compensation will not be enforceable against any party other than the
party who entered into such agreement; (2) be subordinate and inferior to the
lien of this Mortgage; and (3) not be enforceable against Mortgagee. Mortgagor
shall promptly furnish Mortgagee with evidence of Mortgagor's compliance with
this paragraph upon the execution of each such contract or agreement.
1.11 BOOKS, RECORDS AND ACCOUNTS. (a) Mortgagor shall keep and
maintain or shall cause to be kept and maintained on a calendar year basis, in
accordance with generally accepted accounting principles, consistently applied,
proper and accurate books, records and accounts reflecting all of the financial
affairs of Mortgagor with respect to all items of income and expense in
connection with the operation of the Property, whether such income or expense be
realized by Mortgagor or by any other person whatsoever (excepting lessees
unrelated to and unaffiliated with Mortgagor who have leased from Mortgagor
portions of the Property for the purpose of occupying same). Mortgagee or its
representatives or designees shall have the right from time to time at all times
during normal business hours to examine, with respect to the Property, such
books, records and accounts at the office of Mortgagor or other person
maintaining such books, records and accounts and to make copies or extracts
thereof as Mortgagee shall desire. Mortgagee and the Rating Agencies shall also
have the right to discuss Mortgagor's affairs, finances and accounts with
representatives of Mortgagor, at such reasonable times as may be requested by
Mortgagee. Mortgagor shall deliver (1) to Mortgagee (with a copy to the Rating
Agencies) within one hundred twenty (120) calendar year, audited financial
statements prepared by an days after the close of independent certified public
accountant (or firm of independent certified public accountants) reasonably
acceptable to Mortgagee, prepared in accordance with generally accepted
accounting principles, consistently applied, containing a balance sheet, profit
and loss statements and income and expense statements (including capital
expenditures) with such detailed supporting schedules covering the operation of
the Property as Mortgagee shall require and certified by the managers, if the
Mortgagor is a limited liability company, by the chief financial officer of
Mortgagor, if Mortgagor is a corporation, by a general partner of Mortgagor, if
Mortgagor is a partnership, or by Mortgagor, if Mortgagor is an individual and
(ii) to Mortgagee (but not to the Rating Agencies) (a) an audited financial
statement of JMB (as hereinafter defined) within one hundred eighty (180) days
after the close of each calendar year, and (b) an unaudited internally certified
financial statement of OPCC (as hereinafter defined) within one hundred twenty
(120) days after the close of each calendar year, which statements shall be
prepared by an independent certified public accountant (or firm of independent
certified public accountants) reasonably acceptable to Mortgagee prepared in
accordance with generally accepted accounting principles, consistently applied,
certified as true and correct by the chief financial officer of the Guarantors.
In addition, Mortgagor shall deliver to Mortgagee (With a copy to the Rating
Agencies) within forty-five (45) days after the close of each calendar quarter,
unaudited financial statements, internally prepared in
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accordance with generally accepted accounting principles, consistently applied
and certified by the managing member, managing general partner or chief
financial officer, as applicable, of Mortgagee, containing the same information
and schedules as required in clause (i) above but only for such preceding
calendar quarter. To the extent requested by Mortgagee, Mortgagor shall also
furnish a current rent roll identifying all tenants at the Real Property and the
principal business terms of their respective Leases.
(b) Mortgagor will, reasonably promptly after written request by
Mortgagee or any Rating Agency, furnish or cause to be furnished to Mortgagee,
in such manner and detail as may be reasonably requested by Mortgagee, such
reasonable additional information as may be reasonably requested by Mortgagee
with respect to the Property.
1.12 SUBROGATION. As additional security hereunder, Mortgagee shall
be subrogated to the lien, although released of record, of any and all
encumbrances paid out of the proceeds of the loan evidenced by the Notes (the
"Loan") and secured by this Mortgage and Mortgagee, upon making such payment,
shall be subrogated to all of the rights of the person, corporation or body
politic receiving such payment.
1.13 COLLATERAL SECURITY INSTRUMENTS. Mortgagor covenants and
agrees that if Mortgagee at any time holds additional security for any
obligations secured hereby, it may enforce the terms thereof or otherwise
realize upon the same, at its option, either before or concurrently herewith or
after a sale is made hereunder, and may apply the proceeds to the Secured
Indebtedness in such order as Mortgagee may determine, without affecting the
status of or waiving any right to exhaust all or any other security, including
the security hereunder, and without waiving any breach or default or any right
or power whether exercised hereunder or under any of the other Loan Documents,
or contained herein or therein, or in any such other security.
1.14 SUITS AND OTHER ACTS TO PROTECT THE PROPERTY.
(a) Mortgagor covenants and agrees to appear in and defend any
action or proceeding purporting to affect the Property, any other security
afforded by any of the Loan Documents and/or the interest of Mortgagee
thereunder. Mortgagor shall immediately notify Mortgagee of the commencement, or
receipt of notice, of any such action or proceeding or other matter or claim
purporting to affect the Property in any material respect or purporting to
affect any other security afforded by any of the Loan Documents and/or the
interest of Mortgagee thereunder.
(b) Mortgagee shall have the right, at the cost and expense of
Mortgagor, to institute and maintain such suits and proceedings and take such
other action, as it may deem expedient to preserve or protect the Property
during the continuance of an Event of Default, and at any time with respect to
any other security afforded by any of the Loan Documents and/or Mortgagee's
interest therein. Any reasonable sums (including reasonable attorneys fees and
disbursements) so expended by Mortgagee under this Section 1.14(b) shall be
reimbursed to Mortgagee in accordance with Section 3.10 hereof.
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1.15 MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS. Mortgagor
agrees that, if Mortgagor fails to perform any act or to pay any money which
Mortgagor is required to perform or pay under the Loan Documents, Mortgagee, at
the reasonable cost and expense of Mortgagor and in Mortgagor's name or in its
own name, may, after the expiration of the applicable notice and cure period,
(but shall not be obligated to) perform or cause to be performed such act or
take such action or pay any money; provided that Mortgagee first gives Mortgagor
at least five (5) days advance written notice of the intent of Mortgagee to
undertake the foregoing action or payment (unless an emergency situation
requires more immediate action or payment, in which case no prior notice need be
given). All reasonable sums (including reasonable attorneys fees) paid by
Mortgagee under this Section 1.15 shall be reimbursed to Mortgagee in
accordance with Section 3.10 hereof.
1.16 LIENS AND ENCUMBRANCES.
(a) Subject to Mortgagor's right to contest otherwise specifically
set forth herein, Mortgagor shall not, without the prior written consent of
Mortgagee, create, place or suffer to be created or placed, or through any act
or failure to act, allow to remain, any deed of trust, mortgage, security
interest, or other lien, encumbrance or charge, or conditional sale or other
title retention document, against or covering the Property, or any part thereof
(a "Lien"), other than the Permitted Exceptions and the lien for ad valorem
taxes on the Property not yet delinquent, regardless of whether the same are
expressly or otherwise subordinate to the lien or security interest created in
this Mortgage, and should any of the foregoing become attached hereafter in any
manner to any part of the Property, Mortgagor shall cause the same to be
promptly discharged, released or bonded over (in a manner reasonably
satisfactory to Mortgagee). Except for leased equipment, Mortgagor shall own all
parts of the Property and, except for substitutions or replacements of
equivalent value acquired in the ordinary course of business, or otherwise as
expressly approved in writing by Mortgagee, shall not acquire any fixtures,
equipment or other property forming a part of the Property pursuant to a lease,
license, title retention document or similar agreement.
(b) Nothing contained herein shall be deemed to require Mortgagor to
pay, or cause to be paid, or to satisfy any mechanic's lien, so long as
Mortgagor is in good faith, and by proper legal proceedings, where appropriate,
diligently contesting the validity, amount or application thereof, provided that
in each case, at the time of the commencement of any such action or proceeding,
and during the pendency of such action or proceeding (i) no Event of Default
shall exist and be continuing hereunder, (ii) Mortgagor shall keep Mortgagee
apprised of the status of such contest; (iii) such contest operates to suspend
collection or enforcement as the case may be, of the contested Imposition or
Lien and such contest is maintained and prosecuted continuously and with
diligence or the mechanic's lien is bonded, (iv) and (v) Mortgagor shall provide
security in the form of a bond or other security reasonably acceptable to
Mortgagee, an amount requested by Mortgagee, but in no event less than 125% of
(A) the amount of Mortgagor's obligations being contested plus (B) any
additional interest, charge, or penalty arising from such contest.
Notwithstanding the foregoing, the creation of any such reserves or the
furnishing of any bond or other security, Mortgagor promptly shall pay any
contested mechanic's lien, and payment thereof shall not be
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deferred, if, at any time the Property or any portion thereof shall be, in
Mortgagee's reasonable judgment, in imminent danger of being forfeited or lost
or Mortgagee is likely to be subject to civil or criminal damages as a result
thereof. If such action or proceeding is terminated or discontinued adversely
to Mortgagor, Mortgagor shall deliver to Mortgagee reasonable evidence of
Mortgagor's compliance with such contested mechanic's lien.
1.17 LIABILITY OF MORTGAGOR. (a) Except for the personal liability
and guaranty obligations set forth in the Guaranty (as hereinafter defined) and
as expressly set forth in this Section 1. 17, notwithstanding anything to the
contrary contained in this Mortgage or in any of the other Loan Documents, , but
without in any manner releasing, impairing or otherwise affecting this Mortgage
or any of the other Loan Documents, or the validity hereof or thereof, or the
lien of this Mortgage, neither Mortgagor, nor any present or future "Constituent
Member" (as hereinafter defined) in or agent of Mortgagor nor any present or
future shareholder, partner, member, officer, director, employee, trustee,
affiliate, beneficiary, advisor, principal, participant or agent of or in any
corporation, trust or other entity that is or becomes a Constituent Member in
Mortgagor, shall have any personal liability, directly or indirectly, under or
in connection with the Loan Documents or any other instrument or certificate
executed in connection with the Loan or the Loan Documents or any amendment(s)
or modification(s) to any of the foregoing made at any time or times, heretofore
or hereafter; the recourse of Mortgagee, and its successors and assigns, under
or in connection with the Loan, the Loan Documents and such instruments,
certificates, amendment(s) and modification(s), shall be limited to the Property
only, and Mortgagee, on its own behalf and on behalf of its successors and
assigns and any other party, hereby waives any such personal liability. A
"Constituent Member' in Mortgagor shall mean any person or entity that is a
partner in or member of Mortgagor, or any person or entity that, directly or
indirectly through one or more limited liability companies or partnerships, is a
partner in or member of Mortgagor. For purposes of the Loan Documents and such
instruments and certificates, and any such amendment(s) or modification(s)
thereto, neither the negative capital account of any Constituent Member in
Mortgagor, nor any obligation of any Constituent Member in Mortgagor, to restore
a negative capital account or to contribute or advance capital to Mortgagor or
to any other Constituent Member in Mortgagor shall at any time be deemed to be
the property or an asset of Mortgagor or any such other Constituent Member (and
neither Mortgagee nor any of its successors and assigns shall have any right to
collect, enforce or proceed against or with respect to any such negative capital
account or such Constituent Member's obligation to restore, contribute or
advance capital to the applicable limited liability company or partnership).
(b) Notwithstanding any of the foregoing, nothing contained in this
Section 1.17 shall be deemed to prejudice the right of Mortgagee following
foreclosure or a deed-in lieu of foreclosure to (i) recover actual damages
against Copley for fraud, intentional material misrepresentation or intentional
waste; and/or (ii) recover any condemnation proceeds or insurance proceeds or
other similar funds or payments attributable to the Property which have been
intentionally misapplied by Copley (but only to the extent of such intentional
misapplication) or which, under the terms of the Loan Documents, should have
been paid to Mortgagee (but only to the extent of the amount that should have
been paid to Mortgagee),
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and/or (iii) recover the amount of any tenant security deposits, prepaid rents
or expense recoveries under the Leases paid to or held by Copley in connection
with the Property and not properly applied or turned over to Mortgagee after
foreclosure of the Property or deed-in-lieu of. foreclosure; and/or (iv) recover
the rents and revenues received by Copley from the Property after the occurrence
of an Event of Default that is continuing, which have not been applied to pay
any portion of the Secured Indebtedness, operating (including leasing) and
maintenance expenses of the Property, Premiums, Impositions, deposits into
reserve or replacement or other sums required by the Loan Documents or capital
expenditures and repairs; and/or (v) recover actual damages against Copley,
caused by the material breach by Copley of the covenants, obligations and
liabilities, contained in Sections 3.08, 3.11 and 3.17 of this Mortgage. Copley
shall be personally liable for Copley's obligations arising in connection with
the matters set forth in the foregoing clauses (i) to (v) inclusive to the
extent provided for in said clauses. Notwithstanding anything to the contrary
contained in this Section 1.17(b), Copley shall have personal liability under
the Indemnity Agreement.
(c) Notwithstanding anything to the contrary contained in this
Section 1.17, on the date hereof JMB Realty Corporation ("JMB") and Overseas
Partners Capital Corporation ("OPCC"; JMB and OPCC each a Guarantor and,
collectively, the "Guarantors") have executed and delivered to Mortgagee a
Guaranty Agreement (the "Guaranty") by which such Guarantors have, jointly and
severally, guaranteed Copley's liability for the matters set forth in Section
1.17(b) clauses (i) to (v) inclusive and under the Indemnity Agreement, and all
costs incurred by Mortgagee in connection with the recovery of any amounts from
Guarantors under the Guaranty. In the event that (x) JMB transfers its interest
in Copley to Urban Shopping Centers, L.P., an Illinois limited partnership
("Urban") in accordance with the Loan Documents, and (y) Urban delivers to
Mortgagee a guaranty, in form, scope and substance substantially similar to the
Guaranty, Mortgagee shall release JMB of its liability under the Guaranty with
respect to matters arising from and after the date of such delivery.
(d) Copley's obligations arising in connection with the matters set
forth in clauses (i) through (v) of Section 1.17(b) and the Indemnity Agreement
are sometimes referred to herein and in the other Loan Documents as the
"Recourse Obligations."
ARTICLE II - DEFAULTS AND REMEDIES
2.01 EVENTS OF DEFAULT. Any of the following shall be deemed to be a
material breach of Mortgagor's covenants herein and shall constitute a default
hereunder ("Event of Default" which term shall also include any other matter
denominated in this Mortgage as an "Event of Default" whether or not listed or
referred to specifically in this Section 2.01):
(a) The failure of Mortgagor to pay all amounts secured hereby at
the maturity of the Note or the failure of Mortgagor to pay
(x) any installment of principal, interest or principal and
interest, any required escrow deposit or any other sum required
to be paid under any Loan Document prior to such maturity with
respect to which a due date
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is set forth in the Loan Documents (hereinafter an "Installment"), whether to
Mortgagee or otherwise within seven (7) days after notice from Mortgagee to
Mortgagor, provided, however, that if (A) Mortgagee shall have sent Mortgagor
one (1) notice of any such failure to pay an Installment even though such
failure shall have been cured, and (B) during the same calendar year in which
such notice has been sent by Mortgagee to Mortgagor, Mortgagor thereafter shall
fail to pay any Installment-Mortgagee shall not be required to give Mortgagor
notice of any subsequent failure to pay any Installment under this clause (x)
and thereafter, for the remainder of such calendar year, the nonpayment of any
Installment for more than seven (7) days after the date on which such
Installment shall have become due and payable (no prior demand being necessary)
shall be an Event of Default hereunder, or
(y) all amounts for which no due date is expressly otherwise
set forth for such payment within seven (7) days of written
demand from Mortgagee to Mortgagor for such payment;
(b) The violation or breach of any of the covenants or other
provisions in Sections 3.03, 3.14 and/or 3.15 of this Mortgage;
(c) The filing by Mortgagor or any Guarantor of a voluntary
petition or application for relief in bankruptcy or Mortgagor's or any Guarantor
adjudication as a bankrupt or insolvent or the filing by Mortgagor or any
Guarantor of any petition, application for relief or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law, code or regulation relating to
bankruptcy, insolvency or other relief for debtors. or the commencement of any
proceedings under any bankruptcy or insolvency law brought against Mortgagor or
any Guarantor by any other party, which proceeding remains undischarged ninety
(90) days after the filing thereof, or Mortgagor's or any Guarantor's seeking or
consenting to or acquiescing in the appointment of any trustee, custodian,
conservator, receiver or liquidator of Mortgagor or any Guarantor or of all or
any substantial part of the Property or of any or all of the Rents and Profits
thereof, or the making of any general assignment for the benefit of creditors,
or the admission in writing of its inability to pay its debts generally as they
become due;
(d) If any warranty, representation, certification, financial
statement or other information made or furnished at any time pursuant to the
terms of the Loan Documents or otherwise, by Mortgagor, or by any person or
entity otherwise liable under any Loan Document shall be materially false or
misleading or furnished with knowledge of the false nature thereof and such
default is not cured within thirty (30) days after notice from Mortgagee;
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(e) If Mortgagor shall suffer or permit the Property, or any part
thereof, to be used in such manner as would (1) impair Mortgagor's title to the
Property, or any part thereof; or (2) create rights of adverse use or
possession; or (3) constitute an implied dedication of the Property, or any part
thereof and such default is not cured within thirty (30) days after notice from
Mortgagor-,
(f) If there occurs (1) a breach or default by Mortgagor in any of
the Management Agreements (as hereinafter defined) not cured within the
applicable cure period, or (2) an assignment or other transfer of any of the
Management Companies' interest in its respective Management Agreements to any
entity (whether or not such entity is an affiliate of such Management Company)
without the prior written consent of Mortgagee, such consent not to be
unreasonably withheld, or (3) a termination, cancellation or surrender of any
Management Agreement (unless occurring pursuant to the provisions thereof,
subject to Mortgagee's rights under the Estoppel and Subordination Agreements of
even date herewith from Copley and the managers under the Management Agreements
(the "ESA's")) without the prior written consent of Mortgagee, in its reasonable
discretion;
(g) if there is any default under the provisions of the Guaranty;
or
(h) To the extent not otherwise made an Event of Default under this
Section 2.01 or any other provision of this Mortgage, the failure of Mortgagor
to perform or observe any other term, provision, covenant, condition or
agreement under any Loan Document which failure continues for a period of thirty
(30) days after written notice of such failure is provided by Mortgagee to
Mortgagor (provided that such 30-day period shall be extended for an additional
60-day period if (i) the failure is of such a nature as not to be reasonably
susceptible to cure within the original 30-day period and (ii) Mortgagor
commences such cure within the original 30-day period and can cure within such
additional 60-day period or such longer period as is reasonably necessary to
cure so long as Mortgagor is diligently prosecuting such cure and continues to
diligently prosecute such cure to completion.)
For purposes of this Mortgage, the term "default," as used in the
STATUTORY POWER OF SALE, shall mean an Event of Default, as defined in this
Mortgage.
2.02 REMEDIES UPON EVENT OF DEFAULT. Upon the happening of any Event
of Default, the Secured Indebtedness shall, at the option of Mortgagee, become
immediately due and payable, without further notice or demand, and Mortgagee may
forthwith undertake any one or more of the following:
(a) Foreclosure. Exercise the STATUTORY POWER OF SALE (as later
provided herein), institute an action of mortgage foreclosure in accordance with
the law of the State, or take such other action as the law may allow, at law or
in equity, for the enforcement of the Loan Documents and realization on the
Property or any other security afforded by the Loan Documents, and subject to
the provisions of Section 1.17 hereof, in the case of a judicial proceeding,
proceed to final judgment and execution thereon for the amount of the Secured
Indebtedness (as of the date of such judgment together with all costs of suit,
reasonable
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attorneys' fees and interest on such judgment at the maximum rate permitted by
law from and after the date of such judgment until actual payment is made to
Mortgagee in the full amount due Mortgagee; provided, however, if Mortgagee is
the purchaser at the foreclosure sale of the Property, the foreclosure sale
price (Mortgagee's final bid) shall be applied against the total amount due
Mortgagee; and/or
(b) Entry. Enter into possession of the Property, lease the same,
collect all Rents and Profits therefrom and, after deducting all costs of
collection and administration expenses, apply the remaining Rents and Profits in
such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect
to the payment of Impositions, operating costs, Premiums and other charges
(including, but not limited to, costs of leasing the Property and fees and costs
of counsel and receivers) and to the maintenance, repair, and restoration of the
Property, or on account and in reduction of the Secured Indebtedness; and/or
(c) Receivership. Have a receiver appointed to enter into possession
of the Property, collect the Rents and Profits therefrom and apply the same as
the appropriate court may direct. Mortgagee shall be entitled to the appointment
of a receiver without the necessity of proving either the inadequacy of the
security or the insolvency of Mortgagor or any other person who may be legally
or equitably liable to pay any portion of the Secured Indebtedness and Mortgagor
and each such person shall be deemed to have waived such proof and to have
consented to the appointment of such receiver. Should Mortgagee or any receiver
collect the Rents and Profits, the moneys so collected shall not be substituted
for payment of the Secured Indebtedness nor can they be used to cure the Event
of Default.
2.03 APPLICATION OF PROCEEDS OF SALE. In the event of a sale of the
Property pursuant to Section 2.02(a) hereof, the proceeds of said sale, to the
extent permitted by law, shall be applied to the following, in such order as
Mortgagee shall, in its sole discretion, determine: the expenses of such sale
and of all proceedings in connection therewith, including attorneys' fees and
expenses; Impositions, Premiums, liens, and other charges and expenses; the
outstanding principal balance of the Secured Indebtedness; any accrued interest;
and any other unpaid portion of the Secured Indebtedness.
ARTICLE III - GENERAL COVENANTS
3.01 SECURITY AGREEMENT.
(a) THIS MORTGAGE CREATES A LIEN ON THE PROPERTY, AND TO THE EXTENT
THE PROPERTY IS PERSONAL PROPERTY UNDER APPLICABLE LAW, THIS MORTGAGE
CONSTITUTES A SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE OF THE STATE
WHERE THE PERSONAL PROPERTY IS SITUATED (THE -U.C.C.-) AND ANY OTHER APPLICABLE
LAW AND IS FILED AS A FIXTURE FILING. UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT, MORTGAGEE MAY, AT ITS OPTION, PURSUE ANY AND ALL RIGHTS AND REMEDIES
AVAILABLE TO A SECURED PARTY WITH RESPECT TO ANY PORTION OF THE PROPERTY, AND/OR
MORTGAGEE MAY, AT ITS OPTION, PROCEED AS TO ALL OR ANY PART OF THE PROPERTY IN
ACCORDANCE WITH
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MORTGAGEE'S RIGHTS AND REMEDIES WITH RESPECT TO THE LIEN CREATED BY THIS
MORTGAGE.
(b) The grant of a security interest to Mortgagee in the granting
clause of this Mortgage shall not be construed to derogate from or impair the
lien or provisions of or the rights of Mortgagee under this Mortgage with
respect to any property described therein which is real property or which the
parties have agreed to treat as real property. The hereby stated intention of
Mortgagor and Mortgagee is that everything now or hereafter owned by the
Mortgagor and used in connection with the production of income from such real
property or adapted for use thereon is, and at all times and for all purposes
and in all proceedings, both legal and equitable, shall be regarded as real
property, irrespective of whether or not the same is physically attached to the
Land and/or Improvements.
(c) If reasonably required by Mortgagee, at any time during the term
of this Mortgage, Mortgagor will execute and deliver to Mortgagee, in form
satisfactory to Mortgagee, additional security agreements. financing statements
and/or other instruments covering all Personal Property or fixtures of Mortgagor
which may at any time be furnished, placed on, or annexed or made appurtenant to
the Real Property or used, useful or held for use, in the operation of the
Improvements.
(d) Mortgagor hereby irrevocably constitutes and appoints Mortgagee
as its attorney-in-fact and such appointment is coupled with an interest, to
execute, deliver and file with the appropriate filing officer or office such
security agreements, financing statements and/or other instruments as Mortgagee
may request or require in order to impose and perfect the lien and security
interest created hereby more specifically on the Personal Property or any
fixtures.
(e) If Mortgagor enters into a separate security agreement with
Mortgagee relating to any of the Personal Property or fixtures, the terms of
such security agreement shall govern the rights and remedies of Mortgagee after
an Event of Default thereunder.
(f) It is understood and agreed that, in order to protect Mortgagee
from the effect of U.C.C. Section 9-313, as amended from time to time, in the
event that Mortgagor intends to purchase (subject, however, to the provisions of
Section 3.15) any goods of a value of Five Hundred Thousand and 00/100 Dollars
($500,000.00) or more which may become fixtures attached to the Property, or any
part thereof, and such goods will be subject to a purchase money security
interest held by a seller or any other party:
(1) Mortgagor shall, before executing any security agreement
or other document evidencing or perfecting such security interest, obtain the
prior written approval of Mortgagee, which approval shall be in Mortgagee's sole
discretion, and all requests for such written approval shall be in writing and
contain the following information: (i) a description of the. fixtures to be
replaced, added to, installed or substituted; (ii) the address at which the
fixtures will be replaced, added to, installed or substituted; and (iii) the
name and address of the proposed holder and proposed amount of the security
interest.
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Mortgagor's execution of any such security agreement or other document
evidencing or perfecting such security interest without Mortgagee's prior
written approval shall constitute an Event of Default. No consent by Mortgagee
pursuant to this subparagraph shall be deemed to constitute an agreement to
subordinate any right of Mortgagee in fixtures or other property covered by this
Mortgage.
(2) If at any time Mortgagor fails to make any payment on an
obligation secured by a purchase money security interest in the Personal
Property or any fixtures, Mortgagee, at its option, may at any time pay the
amount secured by such security interest. Any money paid by Mortgagee under
this subparagraph, including any expenses, costs, charges and attorneys' fees
incurred by Mortgagee, shall be reimbursed to Mortgagee in accordance with
Section 3. 10 hereof. Mortgagee shall be subrogated to the rights of the holder
of any such purchase money security interest in the Personal Property.
(3) Mortgagee shall have the right to acquire by assignment from the
holder of such security interest any and all contract rights, accounts
receivable, negotiable or non-negotiable instruments, or other evidence of
Mortgagor's indebtedness for such Personal Property or fixtures, and, upon
acquiring such interest by assignment, shall have the right to enforce the
security interest as assignee thereof, in accordance with the terms and
provisions of the U.C.C. and in accordance with any other provisions of law.
(4) Whether or not Mortgagee has paid the indebtedness secured by,
or taken an assignment of, such security interest, Mortgagor covenants to pay
all sums and perform all obligations secured thereby, and if Mortgagor at any
time shall be in default under such security agreement (beyond applicable cure
periods, if any), it shall constitute an Event of Default if not cured within
ten (10) days after notice from Mortgagee to Mortgagor.
(5) The provisions of subparagraphs (2) and (3) of this paragraph
(f) shall not apply if the goods which may become fixtures are of at least
equivalent value and quality as any property being replaced and if the rights of
the party holding such security interest have been expressly subordinated, at no
cost to Mortgagee, to the lien and security interest of this Mortgage in a
manner satisfactory to Mortgagee, including without limitation, at the option of
Mortgagee, providing to Mortgagee a satisfactory opinion of counsel to the
effect that this Mortgage constitutes a valid and subsisting first lien on such
fixtures which is not subordinate to the lien of such security interest under
any applicable law, including without limitation, the provisions of Section 9-
313 of the U.C.C. Notwithstanding anything to the contrary in this paragraph
(f), in no event shall any purchase money security interest which is a lien on
all or any part of the Property of any dollar amount be granted by Mortgagor
without first obtaining the prior written consent of Mortgagee in its sole
discretion.
(g) Mortgagor hereby warrants, represents and covenants as follows:
(1) Other than as set forth on Exhibit "G" Mortgagor is and has been
the sole owner of the Personal Property for at least fifteen (15) days free from
any lien, security interest, encumbrance or adverse claim thereon of any kind
whatsoever. Mortgagor
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will notify Mortgagee of, and will protect, defend and indemnify Mortgagee
against, all claims and demands of all persons at any time claiming any rights
or interest therein.
(2) The Personal Property is not used or bought and shall not be
or bought for personal, family, or household purposes, but shall be bought and
used solely for the purpose of carrying on Mortgagor's business.
(3) The Personal Property has been located on the land and/or
Improvements for at least fifteen (15) days and will be kept on or at the Land
or the Improvements and Mortgagor will not remove the Personal Property
therefrom without the prior written consent of Mortgagee not to be unreasonably
withheld, except such portions or items of Personal Property which are consumed
or whom out in ordinary usage, all of which shall be promptly replaced by
Mortgagor with other Personal Property of value equal to or greater than the
value of the replaced Personal Property when new, and except such portions or
items of Personal Property temporarily stored elsewhere to facilitate
refurbishing or repair thereof or of the Improvements.
(4) Mortgagor maintains a place of business in the State and
Mortgagor will immediately notify Mortgagee in writing of any change in its
principal place of business as set forth in the beginning of this Mortgage.
3.02 NO WAIVER. No single or partial exercise by Mortgagee, or delay
or omission in the exercise by Mortgagee, of any right or remedy under the Loan
Documents shall preclude, waive or limit any other or further exercise thereof
or the exercise of any other right or remedy. Mortgagee shall at all times have
the right to proceed against any portion of, or interest in, the Property in
such manner as Mortgagee may deem fit, without waiving any other rights or
remedies with respect to any other portion of the Property.
3.03 CONVEYANCE OF PROPERTY, CHANGE IN OWNERSHIP AND COMPOSITION.
(a) Except as otherwise specifically set forth in this Section 3.03,
Mortgagor may not cause, permit, or suffer, without the prior written consent of
Mortgagee in its sole discretion: (i) all or any part of the Property or any
interest in the Property, to be conveyed, transferred, assigned, encumbered,
sold or otherwise disposed of, (ii) any conveyance, transfer, pledge or
encumbrance of any interest in Mortgagor or any member's, partner's,
shareholder's interest in Mortgagor or other beneficial interest in Mortgagor,
other than a pledge of all or a portion of JMB's or Urban's (assuming Urban
purchases JMB's interest in Copley in accordance with the provisions hereof)
direct membership interest in Copley to OPCC or a pledge of all or a portion of
OPCC's direct membership interest in Copley to JMB or Urban as described in
Section 8 of Exhibit E of Copley's Operating Agreement provided no obligations
or liabilities of Copley are affected as a result thereof; (iii) any change in
the individuals comprising, or in the partners, or stockholders, or members or
beneficiaries of, Mortgagor from those represented to Mortgagee on the date of
this Mortgage; (iv) any merger, reorganization, dissolution, conversion or other
change in the ownership structure of Mortgagor or any of the members of
Mortgagor, including, without limitation, any conversion
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of Mortgagor or any member, or partner of Mortgagor from corporation to a
general or limited partnership, a limited liability partnership or a limited
liability company; or (v) any financing in addition to the Loan, except as
otherwise specifically permitted in the Loan Documents, whether or not such
financing is unsecured or is secured by a lien, security interest or other
encumbrance of all or any part of the Property (each a "Transfer", and
collectively, "Transfers"). However, these prohibitions will not apply to
transfers of ownership as a result of the death, or in connection with estate
planning, of a natural person to a spouse, son or daughter or descendant of
either, or to a stepson or stepdaughter or descendant of either.
(b) Without in any way limiting Mortgagee's approval rights as set
forth above, Mortgagee agrees that the payment of a transfer fee will not be
required in connection with the following transfers: (i) a transfer by JMB,
Urban and/or OPCC of all or any portion of their direct membership interests in
Copley among each other or to an affiliate entity of Urban, JMB and/or OPCC of
which Urban, JMB or OPCC or the direct parent entity of OPCC (owning 100% of the
voting stock of OPCC) as of the date hereof or the Malkin Group or the Bluhm
Group (as such terms are hereinafter defined) has and retains a controlling
ownership interest and such affiliate entity with respect to the Guaranty shall
have a total asset valuation at least equal to that of JMB or OPCC, or
reasonably acceptable to Mortgagee, or (ii) a conversion of JMB, Urban or OPCC
to another type of entity reflecting a mere change in legal form with no change
in the management of such entity or the respective economic, beneficial and
ownership interests in such entity. For purposes of this subparagraph (b), the
term "control" or "controlling" shall mean the direct or indirect ownership of
at least 51 % of the economic and beneficial interests in the entity in question
(33.33% with respect to entities controlled by Urban, JMB, the Malkin Group
and/or the Bluhm Group) and the right and power to direct the management,
policies and day-to-day business and affairs of the entity in question. As used
herein, the "Bluhm Group" shall mean Neil G. Bluhm, his Family Members (as
hereinafter defined), and any trust, the sole beneficiaries of which are Neil G.
Bluhm and/or his Family Members. As used herein, the "Malkin Group" shall mean
Judd D. Malkin, his Family Members and any trust, the sole beneficiaries of
which are Judd D. Malkin and/or his Family Members. As used herein, an
Individual's "Family Members" shall mean such Individual's spouse, his or her
parents and their spouses, his or her children and their spouses, and his or her
grandchildren or great-grandchildren, and their respective spouses.
(c) Notwithstanding the foregoing provisions of this Section 3.03,
neither consent by Mortgagee nor a transfer fee shall be required for the
following:
(i) the transfer by JMB, Urban and/or OPCC of all or any portion of
their direct membership interests in Copley either to each other or to Urban; or
(ii) the transfer of or change in the ownership interests in either
or both of JMB (or Urban) and OPCC, provided JMB and/or OPCC and/or Urban and/or
an affiliate entity, as described in subparagraph (b) above, of any of JMB,
Urban or OPCC maintains . control (as defined in subparagraph (b) above) of such
member following such transfer or change;
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provided that with respect to each of (i) and (ii) above, (A) the bankruptcy-
remote structure of Copley and the 1 % member of Copley shall not have been
affected as a result of such transfer, (B) Mortgagor shall deliver a new or
updated non-consolidation opinion reasonably acceptable to Mortgagee and the
Rating Agencies, with respect to Mortgagor, its one percent member, the
transferee and any of their respective beneficial owners, as applicable, if
subsequent to any Transfer, such transferee together with any affiliated person
or entity of such transferee, directly or indirectly, own more than 49% of the
membership interests in Copley or more than 49 % of the ownership interests in
the 1 % member of Copley, and (c) such transferee shall assume all of the
obligations of the applicable Guarantor pursuant to an assumption document
reasonably satisfactory in form and substance to Mortgagee.
(d) Notwithstanding anything contained in Section 3.03(a) or
elsewhere in the Loan Documents to the contrary, Mortgagor shall have the one-
time right to transfer the Property to a third party provided that the following
conditions are satisfied: (i) Mortgagor is not in default under the Loan
Documents, (ii) Mortgagee gives its written approval of the proposed third party
transferee based solely on clauses (iii) through (xvii) below, (iii) the
proposed transferee shall be able to make the representations set forth in
Sections 3.11 and 3.18 hereof, (iv) the Net Income (as defined in Exhibit "D"),
in the reasonable opinion of Mortgagee, derived from the Property shall be no
less than 1.6 times annual Debt Service (as defined in Exhibit "D"), (v) the
loan-to-value ratio of the Property at the time of the transfer shall not be
greater than 65%, (vi) Mortgagor shall pay a fee ("Transfer Fee") equal to one-
half of one percent (.5%) of the outstanding principal balance of the Note at
the time of the transfer together with a processing fee in the amount of $10,000
(such processing fee to be paid at the time of such request and to be credited
against such .5 % fee if the transfer occurs), (vii) the proposed third party
transferee shall expressly assume the Loan Documents and the Indemnity Agreement
in a manner reasonably satisfactory to Mortgagee, (viii) the creditworthiness of
the third party must be reasonably acceptable to Mortgagee, (ix) the third party
transferee must be experienced in the ownership, management and leasing of
properties similar to the Property, (x) Mortgagor or third party transferee
shall pay all reasonable costs and expenses incurred by Mortgagee in connection
with the transfer, including title insurance premiums, documentation costs and
reasonable attorneys' fees and disbursements, (xi) Mortgagee shall have
reasonably approved substitute Guarantors who will assume all obligations of the
Guarantors under the Guaranty in a manner reasonably satisfactory to Mortgagee,
(xii) such transferee shall be an entity that meets all the requirements of the
Rating Agencies, as determined by such Rating Agencies in their sole discretion,
including, without limitation, the delivery of a non-consolidation opinion,
provided that Mortgagee pay the reasonable costs of meeting Securitization
requirements of the Rating Agencies, including reasonable legal fees of
preparing such non-consolidation opinion, in the event that Mortgagor is
required to reimburse transferee for such costs or fees, (xiii) such transfer
shall not cause a reduction, withdrawal or revocation of any rating given by any
Rating Agency to the Loan or any participation thereof, as determined by such
Rating Agency in its sole discretion, or if such a rating has not yet been
given, such transfer shall not adversely affect a subsequent rating to be given
by any Rating Agency to the Loan or any participation thereof, as determined by
such Rating Agency in its sole discretion, (xiv) Mortgagor shall have obtained
any approvals to the transfer required by the BRA under the Dartmouth Street
Garage Lease,
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by MTA under the Master Lease and Central Area Sublease and by the MTA and
Copley ONE, LLC with respect to the Marriott Garage Sublease, (xv) all necessary
deferred maintenance on the Property has been completed or reserved against to
the reasonable satisfaction of Mortgagee, (xvi) so long as the Management
Agreements are in effect, there shall be no outstanding deferred amounts payable
to the managers under the terms of the Management Agreements which are not paid
in connection with such transfer, and (xvii) the proposed transferee, its
affiliates, related entities and/or principals therein are free from any
bankruptcy, reorganization or insolvency proceedings or any criminal charges or
proceedings and shall not have been, at the time of transfer or in the past, a
litigant, plaintiff or defendant in any suit brought against or by Mortgagee. In
the event Mortgagee approves such transfer, Mortgagee shall release Mortgagor,
the members or partners of Mortgagor or the Guarantors from their obligations
under the Loan Documents, the Indemnity Agreement or the Guaranty except with
respect to events arising or occurring prior to the date of transfer. Mortgagor
agrees to include with its written request, evidence of the foregoing in
sufficient detail, including without limitation the name, net worth, background
and address of the proposed transferee and principals of the proposed transferee
to enable Mortgagee to determine the acceptability of the proposed transferee.
(e) Mortgagor shall be notified in writing by Mortgagee, within ten
(10) business days following Mortgagee's receipt of Mortgagor's initial request,
of any further information Mortgagee deems necessary to make its determination
of whether it wishes to consent to such transfer and within thirty (30) days
following Mortgagee's receipt of all of the data it deems necessary, as
aforesaid, whether Mortgagee approves such proposed transferee. Failure of
Mortgagee to notify Mortgagor in a timely fashion as contemplated hereunder
shall be deemed disapproval of the proposed transfer by Mortgagee. If Mortgagee
disapproves such proposed transfer or such transfer is so deemed disapproved,
Mortgagee shall within five (5) business days after receipt of notice from
Mortgagor give notice to Mortgagor stating the conditions in paragraph (d) above
which were not satisfied in connection with the proposed transfer. Mortgagor
shall cause Mortgagee's title insurance policy or policies to be endorsed at no
expense to Mortgagee to extend the effective date thereof to the date of the
execution and delivery of the assumption agreement provided in the preceding
subparagraph (d), such endorsement to be executed and delivered with no
additional exceptions added to such title insurance policy or policies. If
Mortgagee consents to such transfer, Mortgagee shall be paid the balance of the
Transfer Fee concurrent with its consent and before the proposed transfer.
(f) Mortgagor hereby irrevocably waives any rights that it may have
to collect money damages for any refusal by Mortgagee to consent to any such
proposed transfer and specifically agrees that Mortgagor's sole remedy at law or
in equity if such refusal is found to be wrongful shall be the initiation,
within sixty (60) days of notice to Mortgagor of such refusal, of a suit for
specific performance against Mortgagee seeking to compel Mortgagee's consent to
the proposed transfer under the terms hereof, except that Mortgagor shall have
the right to make a claim for money damages if Mortgagee's refusal to grant such
consent is determined by a Court to have been in bad faith or willful disregard
of the provisions hereof.
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(g) Mortgagor agrees to submit or cause to be submitted to Mortgagee
within thirty (30) days after December 31st of each calendar year during the
term hereof, without further request from Mortgagee, and within ten (10) days
after any written request by Mortgagee for the same, a sworn, notarized
certificate, signed by an authorized (i) individual who is Mortgagor or one of
the individuals comprising Mortgagor, (ii) partner or member of Mortgagor or
(iii) officer of Mortgagor, as the case may be, stating whether (x) the
Property, or any part thereof, or any interest therein, has been conveyed,
transferred, assigned, encumbered, sold or otherwise disposed of, and if so, to
whom; (y) any conveyance, transfer, pledge or encumbrance of any interest in
Mortgagor has been made by Mortgagor and if so, to whom, or (z) there has been
any change in the individual(s) comprising Mortgagor or in the members,
partners, stockholders or beneficiaries of Mortgagor from those on the date
hereof, and if so, a description of such change or changes.
Except to the extent necessary to effectuate any transfer of interests
as permitted pursuant to this Section 3.03 and to the extent permitted in
Section 3.15, Mortgagor shall not modify, alter or amend the Operating Agreement
or partnership or articles of incorporation of Mortgagor without obtaining the
prior written consent of Mortgagee.
3.04 MORTGAGOR'S ESTOPPEL. Mortgagor shall, within ten (10) days
after a request by Mortgagee, furnish a duly acknowledged written statement in
form satisfactory to Mortgagee setting forth the amount of the Secured
Indebtedness, stating either that no offsets or defenses exist against the
Secured Indebtedness, or if such offsets or defenses are alleged to exist, the
nature and extent thereof and such other matters as Mortgagee may reasonably
request. Mortgagee shall within ten (10) days after a request by Mortgagor
furnish a written statement to the actual knowledge of the loan officer with
primary responsibility for servicing the Loan, setting forth the amount of the
Secured Indebtedness and, whether any Event of Default exists, or whether any
notice of default has been given, under the Mortgage, the Guaranty, the
Indemnity or any of the other Loan Documents.
3.05 FURTHER ASSURANCES. Mortgagor shall, at the cost of Mortgagor,
and without expense to Mortgagee, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, deeds of trust,
assignments, security agreements, financing statements, modifications, notices
of assignments, transfers and assurances as Mortgagee shall from time to time
reasonably require, for the better assuring, conveying, assigning, transferring
and confirming unto Mortgagee the Property and rights hereby conveyed or
assigned or intended now or hereafter so to be, or which Mortgagor may be or may
hereafter become bound to convey or assign to Mortgagee, or for filing,
refiling, registering, reregistering, recording or recording this Mortgage.
Upon any failure by Mortgagor to comply with the terms of this Section,
Mortgagee may, at Mortgagor's expense, make, execute, record, file, rerecord
and/or refile any and all such documents for and in the name of Mortgagor, and
Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact so to do
and such appointment is coupled with an interest.
3.06 FEES AND EXPENSES. Except as the same may be the result of
Mortgagee's or its agents' gross negligence or willful disregard of its
obligations hereunder, if
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Mortgagee becomes a party (by intervention or otherwise) to any action or
proceeding affecting, directly or indirectly, Mortgagor, the Property or the
title thereto or Mortgagee's interest under this Mortgage, or employs an
attorney to collect any of the Secured Indebtedness or during the continuance of
an Event of Default to enforce performance of the obligations, covenants and
agreements of the Loan Documents, Mortgagor shall reimburse Mortgagee for all
reasonable expenses, costs, charges and legal fees incurred by Mortgagee
(including, without limitation, the fees and expenses of experts and
consultants), whether or not suit be commenced, and the same shall be reimbursed
to Mortgagee in accordance with Section 3.10 hereof.
3.07 REPLACEMENT OF NOTE. Upon notice to Mortgagor of the loss,
theft, destruction or mutilation of any Note, Mortgagor will execute and
deliver, in lieu thereof, a replacement note, identical in form and substance to
such Note and dated as of the date of such Note and upon such execution and
delivery all references in any of the Loan Documents to such Note shall be
deemed to refer to such replacement note.
3.08 HAZARDOUS SUBSTANCES.
(a) Mortgagor hereby represents, warrants, covenants and agrees to and
with Mortgagee that, except as disclosed in the Environmental Report dated July
7, 1997 (as to representations and warranties), and to Mortgagor's actual
knowledge, all operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, by Mortgagor, and any tenant, subtenant or
occupant of the Property, or any portion thereof, is presently and shall
hereafter be in all respects in compliance with all state, federal and local
laws and regulations governing or in any way relating to the generation,
handling, manufacturing, treatment, storage, use, transportation, spillage,
leakage, dumping, discharge or disposal (whether legal or illegal, accidental or
intentional) of any Hazardous Substance; and that neither Mortgagor nor (to
Mortgagor's actual knowledge) any tenant, subtenant or occupant of all or any
portion of the Property, has at any time placed, suffered or permitted the
presence of any such Hazardous Substances at, on, under, within or about the
Property, or any portion thereof in violation of applicable law.
(b) In the event any investigation or monitoring of site conditions or
any clean-up, containment, restoration, removal or other remedial work
(collectively. the "Remedial Work") is required under any applicable federal,
state or local law or regulation, by any judicial order, or by any governmental
entity, or in order to comply with any agreement entered into because of, or in
connection with, any occurrence or event described in this Section, Mortgagor
shall perform or cause to be performed the Remedial Work in compliance with such
law, regulation, order or agreement. All Remedial Work shall be performed by
one or more contractors, selected by Mortgagor and reasonably approved in
advance in writing by Mortgagee, and under the supervision of a consulting
engineer, selected by Mortgagor and reasonably approved in advance in writing by
Mortgagee. All costs and expenses of such Remedial Work shall be paid by
Mortgagor including, without limitation, the charges of such contractor(s)
and/or the consulting engineer, and Mortgagee's reasonable attorneys',
architects' and/or consultants' fees and costs incurred in connection with
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monitoring or review of such Remedial Work. In the event Mortgagor shall fail
to timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remedial Work after 30 days notice to Mortgagor by Mortgagee or
earlier if required by governmental authorities (except that in the event of
emergency only concurrent notice shall be required) Mortgagee may, but shall not
be required to, cause such Remedial Work to be performed, and all costs and
expenses thereof, or incurred in connection therewith, shall be reimbursed to
Mortgagee in accordance with Section 3. 10 hereof.
3.09 WAIVER OF CONSEQUENTIAL DAMAGES. Mortgagor covenants and agrees
that in no event shall Mortgagee be liable for consequential damages, whatever
the nature of a failure by Mortgagee to perform its obligation(s), if any, under
the Loan Documents, and Mortgagor hereby expressly waives all claims that it now
or may hereafter have against Mortgagee for such consequential damages.
3.10 MORTGAGEE REIMBURSEMENT. Subject to the notice requirements in
Section 1.15 hereof, any payments made, or funds expended or advanced by
Mortgagee pursuant to the provisions of any Loan Document, shall (1) become a
part of the Secured Indebtedness, (2) bear interest at the Loan Interest Rate
(as such term is defined in the Notes) from the date such payments are made or
funds expended or advanced, (3) become due and payable by Mortgagor upon demand
therefor by Mortgagee, and (4) bear interest at the Default Rate (as such term
is defined in the Notes) from the date of such demand. Failure to reimburse
Mortgagee upon such demand shall constitute an Event of Default under Section
2.01(a) hereof after the expiration of any notice and grace period provided in
Section 2.01 (a).
3.11 ERISA. Mortgagor hereby represents, warrants and covenants as
of the date hereof and throughout the term of this Mortgage that:
(a) Mortgagor is not an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title 1 of ERISA, nor a plan as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the
foregoing hereinafter referred to collectively as a "Plan");
(b) Mortgagor's assets do not constitute "plan assets" of one or more
such Plans within the meaning of Department of Labor Regulation Section 2510.3-
101;
(c) In addition to any of the restrictions contained herein or in any
of the other Loan Documents pertaining to transfers of interests in the
Property, Mortgagor agrees it will not transfer or convey the Property to a Plan
or to a person or entity whose assets constitute such "plan assets" unless
reasonably in advance of the proposed transfer or conveyance, Mortgagor
furnishes Mortgagee with either (i) a written opinion of legal counsel (in form
and substance and from counsel acceptable to Mortgagee), or (ii) an individual
prohibited transaction exemption from the United States Department of Labor (in
form and substance reasonably satisfactory to Mortgagee), that the transfer or
conveyance will not
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constitute a non-exempt prohibited transaction under ERISA as of the date of the
transfer and throughout the term of the loan evidenced by the Note;
(d) Mortgagor will not be reconstituted as a Plan or an entity whose
assets constitute "plan assets"; and
(e) With respect to the Secured Indebtedness, Mortgagor is acting on
its own behalf and not on account of or for the benefit of any Plan.
[(f) Mortgagee hereby represents, warrants and covenants that the Loan
is funded solely out of Mortgagee's general account assets and all of the
requirements under Section 1 of Prohibited Transaction Exemption 95-60 as
published in the Federal Register on July 12, 1995, have and will, throughout
the term of the Loan, be satisfied with respect to the Loan except to the extent
the Loan is assigned by Mortgagee in whole or in part to a third party.
Regarding such assignment, Mortgagee represents that the assignee shall not be
an employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is subject to Title I
of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal Revenue
code of 1986, as amended (each of the foregoing hereinafter referred to
collectively as "Plans"), and (2) the assets of the assignee will not constitute
--------
"plan assets" of one or more such Plans within the meaning of Department of
Labor ("DOL") Regulation Section 2510.3-101.
3.12 BROKERS AND OTHER SPECIAL INDEMNIFICATION MATTERS.
Except to the extent arising out of the acts of Mortgagee or its
agents or employees acting within the scope of their agency or employment or due
to the gross negligence or willful misconduct of Mortgagee or its agents,
Mortgagor shall indemnify, defend and hold Mortgagee harmless from and against
(i) any and all claims for brokerage, leasing, finder's or similar fees which
may relate to the Real Property or the Secured Indebtedness, and (ii) any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including without limitation, attorneys' fees and
disbursements at the trial level and at all appellate levels) of whatever kind
or nature which may be imposed on or incurred by Mortgagee at any time pursuant
either to a judgment or decree or other order entered into by a court or
administrative agency or to a settlement reasonably approved by Mortgagor, which
judgment, decree, order or settlement is related in any way or arises out of the
offer, sale or lease of the Property or transfer of interests therein and/or the
ownership, use, occupation or operation of any portion of the Property,
including without limitation, (a) all claims arising out of or in connection
with a purported Operating Agreement, as such term is defined in an Easement
Agreement dated February 22, 1982 recorded with said Deeds in Book 10011, Page
115, and (b) all loss, cost, damages or expenses arising out of or in connection
with the lack of any sewer connection permit for the Property as may be required
under applicable law.
3.13 MANAGEMENT AGREEMENT. The term "Management Agreements" shall
mean, collectively, the Management Agreement dated as of January 23, 1997
between Borrower and Overseas Management, Inc. (OMI) and the Agreement for
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Consulting and Other Services dated as of January 23, 1997 between OMI and Urban
Retail Properties Co. (OMI and Urban Retail Properties Co. hereinafter sometimes
referred to individually as a "Management Company" and collectively as the
"Management Companies"). No new agreements with respect to the management
and/or operation of the Property and/or managers with respect to the Property
shall be entered into or substituted without Mortgagee's prior written consent
in its sole discretion.
(a) Mortgagor hereby represents and warrants with respect to
each of the Management Agreements as follows:
(i) The copy of the Management Agreements delivered by
Mortgagor to Mortgagee is accurate and complete. There are no
other oral or written agreements, understandings or the like
between Mortgagor and the Management Companies or between the
Management Companies relating to the Property or the Management
Agreements;
(ii) The Management Agreements have not been modified, altered
or amended in any material respect;
(iii) The Management Agreements are in full force and effect and
are valid, binding and enforceable against both the Management
Companies and Mortgagor;
(iv) Neither the Management Companies nor Mortgagor are in
default under the Management Agreements. No state of facts exists
which with notice, the passage of time or both, could ripen into
a default under the Management Agreements. The Management
Companies do not have any claims or rights of offset against the
Mortgagor or each other based upon any prior defaults of
Mortgagor or its predecessor(s) or the other Management Company;
and
(v) The making of the Loan will not result in any breach of,
or constitute a default under, the Management Agreements.
(b) Mortgagor covenants and agrees with respect to the
Management Agreements as follows:
(i) Mortgagor shall fully, timely and completely observe and
perform in all material respects all of its other obligations
under the Management Agreements(taking into account grace or cure
periods, if any, under the Management Agreements).
(ii) Mortgagor shall not cancel, terminate or surrender the
Management Agreements or consent to or accept or permit a
cancellation, termination or surrender thereof, whether or not
such cancellation, termination or surrender is effected in
accordance with the provisions thereof. Mortgagor may not modify,
alter or amend, or permit or suffer the modification, alteration
or amendment
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of, the terms of the Management Agreements, without first
obtaining Mortgagee's prior written consent, which consent shall
not be unreasonably withheld. Mortgagor shall not suffer or
permit to occur any assignment or other transfer of the
Management Companies' interests in the Management Agreements
(whether or not such transfer or assignment is pursuant to rights
granted to any Management Company in the Management Agreements)
without the consent of Mortgagee in its sole discretion.
(iii) Mortgagor shall promptly deliver to Mortgagee copies of
(a) all notices of default, and (b) all other notices,
certificates, documents and instruments sent or received by
Mortgagor under or with respect to the Management Agreements.
(iv) Mortgagee may, but shall not be obligated to, cure any
default by Mortgagor under the Management Agreements. No such
action by Mortgagee shall release Mortgagor from any obligation
under the Loan Documents. Mortgagor shall pay Mortgagee on demand
all costs and expenses, including reasonable attorneys' fees,
incurred by Mortgagee in connection with such cure. Such cure
payments and costs and expenses of Mortgagee shall be secured
hereby with the same priority as the Secured Indebtedness and
shall bear interest from the date so advanced by Mortgagee until
repaid at the Default Rate provided in the Notes.
3.14 GROUND LEASE REPRESENTATIONS AND COVENANTS.
a) As to each of its respective Ground Leases in which it
holds tenant's estate therein, each Mortgagor represents and
warrants as follows:
(i) Such Mortgagor holds a direct leasehold (or subleasehold
in the case of the Central Area Sublease and the Marriott Garage
Sublease) estate in the Real Property demised thereunder pursuant
to such Ground Lease;
(ii) The copy of the Ground Lease delivered by Mortgagor to
Mortgagee is accurate and complete. There are no other oral or
written agreements, understandings or the like between Mortgagor
and its respective lessor or sublessor under the Ground Lease
relating to the Property or the Ground Lease;
(ii) The Ground Lease has not been modified, altered or amended
in any respect;
(iii) The Ground Lease is in full force and effect and is valid,
binding and enforceable against both such respective lessor or
sublessor and Mortgagor;
(iv) Neither such respective lessor or sublessor (as to the MTA
and the BRA, as defined in Schedule A-1 and A-3, respectively, to
Mortgagor's actual knowledge) nor Mortgagor is in default under
the Ground Lease. No state of-
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facts exists which with notice, the passage of time or both,
could ripen into a default under the Ground Lease by Mortgagor or
any lessor or sublessor (as to the MTA or the BRA to Mortgagor's
actual knowledge), except as set forth in the Estoppel
Certificate from the MTA with respect to the Master Lease (the
"MTA Estoppel");
(v) The respective lessor or sublessor under the Ground Lease
has consented to this Mortgage and the execution and delivery of
the Loan Documents (or no consent was required); and the
consummation of the transactions contemplated thereby will not
result in any breach of, or constitute a default under, the
Ground Lease;
(vi) All actions which must be taken for Mortgagee to have the
rights of a leasehold mortgagee pursuant to the Ground Lease have
been taken and completed; and
(vii) Mortgagor has not granted any other leasehold
mortgage or made any other assignment, pledge or hypothecation of
its interest under the Ground Lease that will not be released
upon funding of the Loan.
(b) Each Mortgagor covenants and agrees with respect to
each of its Ground Leases in which it holds tenant's estate
therein as follows:
(i) Such Mortgagor shall pay all rent and other
monetary obligations under the Ground Lease when due and shall
fully, timely and completely observe and perform in all material
respects all of its other obligations under the Ground Lease
(taking into account grace or cure periods, if any, under the
Ground Lease).
(ii) Mortgagor shall not cancel, terminate or
surrender the Ground Lease or consent to or accept a
cancellation, termination or surrender thereof. Such Mortgagor
shall not modify, alter or amend the Ground Lease without, in
each instance, Mortgagee's prior written consent, which shall be
at Mortgagee's sole discretion, except that Mortgagee shall not
unreasonably withhold its consent to an amendment of the Central
Areas Sublease whereby Mortgagor agrees to become liable for
certain repair and maintenance costs of the lighting in
connection with a settlement of the dispute with the MTA
described in the MTA Estoppel.
(iii) Except in the case of permitted transfer
under Section 3.03, Mortgagor shall not convey, assign, sell,
mortgage, encumber, pledge, dispose of, hypothecate, grant a
security interest in, grant options with respect to or otherwise
dispose of (directly or indirectly) by operation of law or
otherwise, of record or not, the Ground Lease or all or any part
of its interest therein without, in each instance, the prior
written consent of Mortgagee, which consent shall be at
Mortgagee's sole discretion.
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(iv) The fee title to the land described in Exhibit "B-1"
through "B-3" (and in the case of Mortgagee's interest in a
subleasehold estate, the estate of Mortgagor's sublessor as
tenant under the underlying lease) and the leasehold estate under
the Ground Lease shall not merge but shall remain at all times
separate and distinct, notwithstanding the union of such estates
in the lessor or sublessor under the Ground Lease, Mortgagor or a
third party, whether by purchase or otherwise.
(v) Mortgagee shall at all times have the rights of
a leasehold mortgagee as set forth in the Ground Lease.
(vi) Mortgagor shall promptly deliver to Mortgagee
copies of (a) all notices of default, and (b) all other notices,
certificates, documents and instruments sent or received by
Mortgagor under or with respect to the Ground Lease.
(vii) In the event of any default by Mortgagor in the
performance of any of its obligations under the Ground Lease,
including, without limitation, any default in the payment of
rent, additional rent and other charges and impositions made
payable by the tenant under the Ground Lease, then, in each and
every case, Mortgagee may, at its option, upon five (5) business
days' notice to Mortgagor, cause the default or defaults to -be
remedied and otherwise exercise any and all of the rights of
Mortgagor thereunder in the name of and on behalf of the
Mortgagor but no such action by Mortgagee shall release Mortgagor
from any default under this Mortgage. Mortgagor shall, on
demand, reimburse Mortgagee for all advances made and expenses
incurred by Mortgagee in curing any such default (including,
without limitation, attorneys' fees and disbursements), together
with interest thereon at the Default Rate provided in the Note
from the date that an advance is made or expense is incurred, to
and including the date the same is paid and such monies so
expended by Mortgagee with interest thereon shall be secured by
this Mortgage.
(viii) Subject to subparagraph (c) below, it is hereby
agreed that the fee title and the leasehold estates in the
property demised by the Ground Lease shall not merge but shall
always be kept separate and distinct, notwithstanding the union
of said estates in either the landlord thereunder, Mortgagor or a
third party, whether by purchase or otherwise and Mortgagee shall
continue to have and enjoy all of the rights and privileges of
the Mortgagee as to the separate estates. If Mortgagor acquires
the fee title, the interest of the Ground Lessee or any other
estate, title or interest in the property demised by the Ground
Lease, or any part thereof, the lien of this Mortgage shall
attach to, cover and be a lien upon such acquired estate, title
or interest and same shall thereupon be and become a part of the
Mortgaged Property with the same force and effect as if
specifically encumbered herein. Mortgagor agrees to execute all
instruments and documents which Mortgagee may reasonably require
to ratify, confirm and further evidence Mortgagee's lien on the
acquired estate, title or interest.
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Furthermore, Mortgagor hereby appoints Mortgagee its true and
lawful attorney-in-fact to execute and deliver all such
instruments and documents in the name and on behalf of Mortgagor.
This power, being coupled with an interest, shall be irrevocable
as long as the Secured Indebtedness remains unpaid. Provided
that no Event of Default has occurred and is continuing,
Mortgagee shall provide Mortgagor ten (10) days prior notice
before exercising such power. Mortgagor shall not purchase the
premises demised by the Ground Lease or acquire the interest of
the Ground Lessor in such premises or sell its interest in the
leasehold estate created by the Ground Lease without Mortgagee's
prior written consent.
(ix) If the Ground Lease is canceled or terminated, and if
Mortgagee or its nominee shall acquire an interest in any new
lease of the property demised thereby, Mortgagor shall have no
right, title or interest in or to the new lease or the leasehold
estate created by such new lease.
(x) Mortgagor shall use its best efforts to obtain and deliver
to Mortgagee from time to time within ten (10) days after written
demand by Mortgagee, an estoppel certificate from the landlord
under the Ground Lease (provided that with respect to estoppel
certificates from the MTA or the BRA or any nonaffiliated Ground
Lessor, Mortgagor shall use reasonable good faith efforts to
obtain such certificates), as requested by Mortgagee, setting
forth (i) the name of the tenant (under the Ground Lease, (ii)
that the Ground Lease has not been modified or, if it has been
modified, the date of each modification (together with copies of
each such modification), (iii) the basic rent and additional rent
payable under the Ground Lease, (iv) the date to which all rental
charges have been paid by the tenant under the Ground Lease, and
(v) whether there are any alleged defaults of the tenant under
the Ground Lease or if there are any events which have occurred
which with notice, such passage of time or both, would constitute
a default under the Ground Lease, and, if there are, setting
forth the nature thereof in reasonable detail and from the
landlord under the Ground Lease containing information similar
thereto.
(xi) Mortgagee shall have no liability or obligation under the
Ground Lease by reason of its acceptance of this Mortgage.
Mortgagee shall be liable for the obligations of the tenant
arising under the Ground Lease for only that period of time which
Mortgagee is in possession of the Mortgaged Property or has
acquired, by foreclosure or otherwise, and is holding all of the
Mortgagor's right, title and interest therein.
(xii) No release or forbearance of any of Mortgagor's
obligations under the Ground Lease, pursuant to the Ground Lease
or otherwise, shall release Mortgagor from any of its obligations
under this Mortgage or the other Loan Documents.
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<PAGE>
(xiii) Mortgagor shall enforce the obligations of the Ground
Lessor under the Ground Lease, and will immediately notify
Mortgagee of any default by either of the lessor, or by
Mortgagor as lessee, in the performance or observance of any of
the terms, covenants and conditions on the part of such lessor or
Mortgagor, as the case may be, to be performed or observed under
the Ground Lease and Mortgagor will immediately advise Mortgagee
of the occurrence of any of the events of default enumerated in
the Ground Lease and of the giving of any notice by the lessor
under the Ground Lease to Mortgagor of any default by Mortgagor,
as such lessee, in the performance or observance of any of the
terms, covenants or conditions of the Ground Lease on the part of
Mortgagor to be performed or observed and will immediately
deliver to Mortgagee a true copy of each such notice. If,
pursuant to the Ground Lease, the lessor shall deliver to
Mortgagee a copy of any notice of default given to Mortgagor, as
lessee under the Ground Lease, such notice shall constitute full
authority and protection to Mortgagee for any action taken or
omitted to be taken by Mortgagee, m good faith and in reliance
thereon. Mortgagor shall promptly deliver to Mortgagee copies of
all notices and other communications to Ground lessor under the
Ground Lease.
(xiv) Mortgagor shall give Mortgagee immediate notice of the
commencement of any arbitration or appraisal proceeding
concerning the provisions of the Ground Lease. Mortgagee shall
have the right to intervene and participate in any such
proceeding and Mortgagor shall confer with Mortgagee and its
attorneys and experts and cooperate with them to the extent which
Mortgagee deems reasonably necessary for the protection of
Mortgagee. Upon the request of Mortgagee, Mortgagor will
exercise all rights of arbitration conferred upon it by the
Ground Lease. If at any time such proceeding shall be commenced,
Mortgagor shall be in material default in the performance or
observance of any covenant, condition or other requirement of the
Ground Lease, or of this Mortgage, on the part of Mortgagor to be
performed or observed, Mortgagee shall have, and is hereby
granted, the sole and exclusive right to designate and appoint on
behalf of Mortgagor, the arbitrator or arbitrators, or appraiser,
in such proceeding.
(xv) Mortgagor will, promptly after the execution and delivery
of this Mortgage or of any instrument or agreement supplemental
hereto, notify the lessor under the Ground Lease in writing of
the execution and delivery hereof and deliver to such lessor a
copy of each such instrument or agreement.
(xvi) If the Ground Lease is rejected in any case, proceeding
or other action commenced by or against the lessor under the
Ground Lease (or any person or party constituting or having an
interest in the Ground Lease) under the Bankruptcy Code of 1978
or any comparable federal or state statute or law, (i) Mortgagor,
immediately after obtaining notice thereof, shall give notice
thereof to Mortgagee, (ii) Mortgagor, without the prior written
consent of
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<PAGE>
Mortgagee, shall not elect to treat the Ground Lease as
terminated pursuant to Section 365(h)(i) of said Bankruptcy Code
or any comparable federal or state statute or law, and any
election by Mortgagor made without such consent shall be void and
(iii) this Mortgage and all the liens, terms, covenants and
conditions of this Mortgage shall extend to and cover Mortgagor's
possessory rights under Bankruptcy Code Section 365(h) and to any
claim for damages due to lessor's rejection of the Ground Lease.
In addition, to the extent not prohibited by applicable law,
Mortgagor hereby assigns to Mortgagee Mortgagor's rights to
accept disaffirmance of the Ground Lease and to offset rents
under the Ground Lease in the event any case, proceeding or other
action is commenced by or against the lessor under the Ground
Lease under the Bankruptcy Code of 1978 or any comparable statute
or law.
(xvii) Mortgagor hereby assigns to Mortgagee Mortgagor's right
to seek an extension of the 60-day period within which Mortgagor
must accept or reject the Ground Lease under Section 365 of the
Bankruptcy Code of 1978 or any comparable federal or state
statute or law with respect to any case, proceeding or other
action commenced by or against Mortgagor under such Code or
comparable federal or state statute or law. Furthermore, at
Mortgagee's request, to the extent not prohibited by applicable
law, Mortgagor shall assign its interest in the Ground Lease to
Mortgagee in lieu of rejecting the Ground Lease as described
above, upon receipt by Mortgagor of written notice from Mortgagee
of such request together with Mortgagor's agreement to cure any
existing defaults of Mortgagor under the Ground I-ease.
c) Immediately following the closing of the Loan, Copley
shall cause the Master Lease between the Massachusetts Turnpike Authority (the
"MTA"), as ground lessor, and UIDC, as ground lessee, referred to in Exhibit A-1
to be terminated with respect to the Central Area Property, and cause the
Central Area Sublease simultaneously with such termination to become a direct
lease between MTA and Copley, by complying with the provisions of that certain
Non-disturbance, Recognition and Direct Leasing Agreement dated August 31, 1982
and recorded in the Suffolk Registry of Deeds in Book 10056, Page 242 (the
"Direct Leasing Agreement") among the MTA, UIDC and UIDC of Massachusetts, Inc.,
the predecessor of Copley as ground lessee under the Central Area Sublease, and
giving to the MTA a Notice of Direct Lease, as provided in Section 6 of the
Direct Leasing Agreement, with the result that Copley's interest in the Central
Area Property will be wholly independent of, and in no way contingent upon, the
Master Lease, that this Mortgage will cover, among other things, such direct
leasehold interest of Copley in the Central Area Property pursuant to the terms
of the Central Area Sublease, and that Mortgagee shall have a valid first
mortgage lien on such direct leasehold interest of Copley in the Central Area
Property. Such Notice of Direct Lease shall include an assignment by UIDC to the
MTA of its interest as lessor under the Central Areas Sublease. In connection
with such collapse of such ground lease structure, Mortgagee, as existing
lender, will execute the Notice of Direct Lease to evidence its consent to such
collapse of the Master Lease pursuant to and in accordance with the terms of the
Direct Leasing Agreement. Following the giving of the Notice of Direct Lease and
the
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assignment of the Master Lease by UIDC to the MTA, UIDC shall automatically and
without the necessity of any further action by or instrument signed by Mortgagee
be released from its obligations under the Notes, Mortgage and all other Loan
Documents.
(d) - Reference is made to that certain Massachusetts Turnpike
Authority Estoppel Certificate delivered to Mortgagee dated the date hereof (the
"Estoppel Certificate") with respect to the Marriott Garage Sublease. Mortgagor
acknowledges and agrees that it will not request a Transfer (as defined in the
Estoppel Certificate) unless and until Mortgagor has received the prior written
approval of Mortgagee to same, such approval not to be unreasonably withheld,
and that if Mortgagee desires to request a Transfer, Mortgagor will also request
such a Transfer at the direction of Mortgagee.
3.15 SINGLE PURPOSE ENTITY/SEPARATENESS. Copley hereby represents
and warrants to, and covenants with, Lender that as of the date hereof and until
such time as the Loan shall be paid in full:
(a) Copley does not own and will not own any asset or property other
than (i) the Property, and (ii) incidental personal property necessary for the
ownership or operation of the Property.
(b) Copley will not engage in any business other than the ownership,
management and operation of the Property and activities incidental thereto and
Copley will conduct and operate its business substantially as presently
conducted and operated. Copley shall not pledge its assets for the benefit of
any other person or entity.
(c) Copley will not enter into any contract or agreement with any
affiliate of Copley, any constituent party of Copley, any Guarantor or any
affiliate of any constituent party or Guarantor, except upon terms and
conditions that are commercially reasonable and substantially similar to those
that would be available on an arms-length basis with third parties other than
any such party. Copley will allocate fairly and reasonably any overhead expenses
that are shared with an affiliate, including paying for office space and
services performed by any employee of an affiliate.
(d) Copley has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Loan or (ii) unsecured trade
and operational debt customarily payable within thirty (30) days incurred in the
ordinary course of business with trade creditors and in amounts and upon terms
of repayment as are normal and reasonable under the circumstances, and (iii)
indebtedness permitted under Section 3.01(f) hereof.
(e) Copley has not made and will not make any loans or advances to
any third party (including any affiliate or constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor), and shall not acquire
obligations or securities of its affiliates or any constituent party and shall
not hold evidence of indebtedness issued by any other person or entity (other
than cash and investment-grade securities).
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(f) Copley is and will remain solvent and Copley will pay its debts
and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due.
(g) Copley has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Copley will not, nor will Copley, except as specifically permitted under Section
3.03 hereof, permit any constituent party or Guarantor to amend, modify or
otherwise change in any material respect the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating
agreement, trust or other organizational documents of Copley, or such
constituent party or Guarantor without the prior written consent of Mortgagee.
(h) Copley will maintain books, records, financial statements and bank
accounts separate from those of its affiliates and any constituent party and
Copley will file its own tax returns. Copley shall maintain its books, records,
resolutions and agreements as official records.
(i) Copley will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any affiliate of Copley, any constituent party of Copley, any Guarantor or any
affiliate of any constituent party or Guarantor), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its affiliates as
a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks.
(j) Copley 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.
(k) Neither Copley nor any constituent party will seek or effect the
dissolution, winding up, sale of assets, liquidation, consolidation or merger,
in whole or in part, of Copley.
(l) Copley will not commingle the funds and other assets of Copley
with those of any affiliate or constituent party, any Guarantor, or any
affiliate of any constituent party or Guarantor, or any other person.
(m) Copley has 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 affiliate or constituent party, any
Guarantor, or any affiliate of any constituent party or Guarantor, or any other
person.
(n) Copley does not and will not hold itself out to be responsible for
the debts or obligations of any other person or entity and does not and will not
guarantee the debts or obligations of any other person or entity.
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(o) Copley shall not hold out its credit as being available to
satisfy the obligations of any other person or entity.
(p) Copley shall pay the salaries of its own employees from its own
funds.
(q) If Copley is a limited partnership or a limited liability
company, a general partner or a member (an "SPC Member"), of Copley is and shall
at all times be a corporation whose sole asset is its interest in Copley, and
each such general partner or SPC Member will at all times comply, and will cause
Copley to comply, with each of the representations, warranties and covenants
contained in this Section 3.15 as if such representation, warranty or covenant
was made directly by such general partner or SPC Member.
(r) Copley shall at all times cause there to be at least one (or
two if required by the Rating Agencies) duly appointed member of the board of
directors (an "Independent Director") of each SPC Member of Copley, as
applicable, reasonably satisfactory to Mortgagee who shall not have been at the
time of such individual's appointment, and may not have been at any time during
the preceding five years (i) a shareholder of, or an officer, director, partner,
attorney or counsel or employee of, Copley or any of its shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to, Copley or any of
its shareholders, subsidiaries or affiliates which derives more than 10% of its
revenues from its activities with Mortgagor or such shareholders, subsidiaries
or affiliates, (iii) a person or other entity controlling or under common
control with any such shareholder, partner, supplier or customer, or (iv) a
Family Member of any such shareholder, officer, director, partner, employee,
supplier or customer. As used in this Section 3.15, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
ownership of voting securities, by contract or otherwise.
(s) Copley shall not cause or permit the board of directors of the
SPC Member to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires the vote of the board of directors of the SPC Member, unless at
the time of such action there shall be at least one member who is an Independent
Director.
(t) Copley shall conduct its business so that the assumptions made
with respect to Copley in that certain opinion letter (the "Non-Consolidation
Opinion") dated the date hereof delivered by Hutchins, Wheeler & Dittmar in
connection with this Mortgage shall be true and correct in all respects.
3.16 SECURITIZATION.
(a) Sale of Notes and Securitization. At the request of Mortgagee
--------------------------------
and, to the extent not already required to be provided by Mortgagor under this
Mortgage, Copley shall use reasonable efforts to satisfy the reasonable
requirements of the Rating Agencies in connection with (x) any sale of Notes or
participation therein or (y) any securitization of rated
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single or multi-class mortgage passthrough or other securities (the
"Securities") secured by or evidencing ownership interests in any Note and this
- -------------
Mortgage or a participation interest in the Loan in a rated or unrated public
offering or private placement (such sale and/or securitization, a
"Securitization"), including, without limitation:
- -----------------
(i)(A) subject to the terms of the Ground Leases, the Management
Agreements, and other agreements affecting the management or operation of the
Property, provide such reasonable financial and other information with respect
to the Property, Copley, the Management Companies (to the extent available) and
any tenants under Leases (to the extent available) of the Property, (B) provide
business plans and budgets relating to the Property and (C) permit such site
inspection, appraisals, market studies, environmental reviews and reports (Phase
I's and, if reasonably deemed appropriate by Mortgagee based on its review of
the Phase 1, Phase H's), engineering reports and other due diligence
investigations of the Property, as may be reasonably requested by Mortgagee or
the Rating Agencies or as may be necessary or appropriate in connection with a
Securitization (the "Provided Information"); Provided, however, that no
--------------------------------- -------
Constituent Members of Copley nor any principal or other affiliate or related
person or entity of Copley or the Constituent Members of Copley, shall be
required to make any representations, warranties or covenants in connection with
a Securitization, nor shall such persons or entities be liable for any
representations, warranties or covenants made by Copley except liability which
is otherwise provided for in Section 1. 17(b) of the Mortgage or the other Loan
Documents; and further provided that any such environmental reviews and reports
and engineering reports shall be performed by reputable engineers that are
licensed to practice in Massachusetts and approved by Copley;
(ii) cause counsel to Copley to render a non-consolidation opinion
in substantially the same form as such opinion delivered on the date hereof;
(iii) make such representations and warranties consistent to those
made by Mortgagor in this Mortgage as of the closing date of a Securitization
subject to necessary updates with respect to the Property, Mortgagor and the
Loan Documents and as may be reasonably requested by Mortgagee or the Rating
Agencies; and
(iv) execute such amendments to the Loan Documents and Copley's
organizational documents, as may be requested by the Rating Agencies in order to
achieve the required rating to effect a Securitization; provided, that nothing
--------
contained in this subsection (iv) shall result in any adverse economic or other
adverse impact on Copley or its Constituent Members (as determined by Copley in
its reasonable discretion) or result in any material liability or adverse tax
impact to Mortgagor or its Constituent Members or their affiliates.
(b) Cooperation with Rating Agencies - In the event the Loan
--------------------------------
secured hereby or any Note or any interest in the Loan or any Note interest
therein becomes an asset of a Securitization, Mortgagor shall use its reasonable
efforts to cooperate to (i) gather any environmental information required by the
Rating Agencies in connection with such a Securitization, (ii) at Mortgagee's
request, meet with representatives of such Rating Agencies to discuss the
business and operations of the Property, and (iii) cooperate with the reasonable
-44-
<PAGE>
requests (subject to subparagraph (a)(iv) above) of the Rating Agencies in
connection with the Securitization.
(c) Securitization Financial Statements. Mortgagor covenants and
-----------------------------------
agrees that, upon Mortgagee's written request therefor in connection with a
Securitization in which this Mortgage or any interest therein is to be included
as an asset, Mortgagor shall deliver audited financial statements and related
documentation prepared in compliance with Section 1.11 hereof by an independent
certified public accountant that satisfy applicable federal securities law
requirements for use in a Public Registration Statement (which may include up to
three (3) years of historical audited financial statements) or an offering
memorandum in connection with a private placement. A "Public Registration
Statement" shall mean a registration statement meeting the requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act").(d)
---------------------
Costs and Expenses. Notwithstanding anything in this Mortgage to the contrary,
- ------------------
Mortgagee shall pay or reimburse Mortgagor for any and all out-of-pocket fees,
costs and expenses incurred by Mortgagor relating to any securitization,
including, without limitation, fees and expenses of any trustee or servicer and
its counsel and underwriter's counsel and accountants and the reasonable fees
and expenses of any independent director(s) of the SPC member of Copley not to
exceed $1,000 per year) other than those fees, costs and expenses which are
otherwise expressly the obligation of Mortgagor under this Mortgage or the other
Loan Documents and would be incurred absent any proposed or actual
Securitization. Whether or not any Securitization closes, Mortgagee shall, at
the direction of Mortgagor, pay directly or reimburse Mortgagor within 30 days
after demand for any reasonable out-of-pocket costs and expenses (including
reasonable fees and disbursements of accountants and counsel) incurred by
Mortgagor in connection with any Securitization which are in excess of the costs
of financial statements and related documentation which Mortgagor would incur
pursuant to Section 1.11 hereof. If in connection with any such Securitization
involving the rating of the Loan or any Note or interest in the Loan or any Note
by a Rating Agency, the servicer or subservicer of the Loan or any Note or
interest in the Loan or any Note will no longer be Mortgagee or any affiliated
entity of Mortgagee, then Mortgagor shall have the right in its reasonable
discretion to approve such new servicer, however, such approval shall be deemed
given if the new servicer is acceptable to any Rating Agency.
(d) Rating Agency. As used herein, the term "Rating Agency" shall
-------------
mean any of the following: Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., Duff & Phelps Credit Rating Co., Moody's Investors
Services, Inc. and Fitch Investor Services, L.P. or, if such entities shall for
any reason no longer perform the functions of a securities rating agency, any
other nationally recognized statistical rating agency designated by Mortgagee;
provided, however, that at any time during which the Loan or any Note or
- -----------------
interest in the Loan or any Note is an asset of a Securitization, "Rating
Agencies" shall mean the rating agencies that from time to time rate the
Securities issued in connection with such Securitization with respect to which
Mortgagee shall have given written notice specifying such rating agencies to
Mortgagor.
-45-
<PAGE>
3.17 COMPLIANCE WITH RICO. Mortgagor covenants and agrees to
--------------------
provide evidence reasonably satisfactory to Mortgagee that the Property is not
subject to forfeiture pursuant to the Racketeer Influenced and Corrupt
Organizations Act of 1970 ("RICO"), including, without limitation,
representations and warranties of Mortgagor that:
(a) The Property will not be used in any manner, and the Property
was not purchased with proceeds (or other things of value) which would subject
the Property for forfeiture pursuant to RICO or any other federal, state or
local law.
(b) No enterprise or activity will be engaged in or conducted by
Mortgagor, and Mortgagor shall not knowingly pen-nit any enterprise or activity
on the Property by any other person of entity, which would subject the Property
to forfeiture pursuant to RICO or any other federal, state or local law.
Mortgagor hereby covenants to defend, indemnify and hold Mortgagee harmless from
and against any and all liability, loss, costs, damage, penalty and expense
(including, without limitation, attorney's fees and costs) that Mortgagee may
incur as a result of any misrepresentation or failure to comply by Mortgagor
with any of the representations, warranties and covenants set forth above.
3.18 REPRESENTATIONS OF MORTGAGOR.
----------------------------
Mortgagor represents and agrees that: (i) no partner, member or
stockholder of Mortgagor is or will be an officer or director of Mortgagee or is
or will be a son, daughter, mother, father or spouse of an officer or director
of Mortgage; and (ii) neither Mortgagor nor any partner, member or stockholder
of Mortgagor is or will be, and no direct legal or beneficial interest in
Mortgagor is or will be held by, a "foreign person" within the meaning of
Sections 1445 and 7701 of the Internal Revenue Code of 1986, and the amendments
of such Code or Regulations as promulgated pursuant to such Code.
ARTICLE IV - MISCELLANEOUS COVENANTS
4.01 REMEDIES CUMULATIVE. Subject to Section 1. 17 hereof, no
right, power or remedy conferred upon or reserved to Mortgagee by any of the
Loan Documents is intended to be exclusive of any other right, power or remedy,
but shall be cumulative and concurrent and in addition to any other right, power
and remedy given hereunder or under any of the other Loan Documents or now or
hereafter existing under applicable law.
4.02 NOTICES. All notices, demands and requests given or required
to be given by either party hereto to the other party shall be in writing. All
notices hereunder shall be deemed to have been duly given if mailed by United
States registered or certified mail, with return receipt requested, postage
prepaid, or by United States Express Mail, UPS overnight or other comparable
overnight courier service to the parties at the addresses set forth on Exhibit
"D" (or at such other addresses as shall be given in writing by any party to the
others) and shall be deemed complete upon receipt or refusal to accept delivery
as indicated in the return receipt or in the receipt of such United States
Express Mail or courier service.
-46-
<PAGE>
4.3 HEIRS AND ASSIGNS; TERMINOLOGY.
(a) This Mortgage applies to, inures to the benefit of, and binds
Mortgagor and Mortgagee, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term "Mortgagor" shall include both the
original Mortgagor and any subsequent owner or owners of any of the Property,
and whenever the term "Mortgagor" is used herein, it shall be deemed to refer to
each Mortgagor individually as well as to both Mortgagors collectively;
provided, however, that the term "Mortgagor" shall not include UIDC after the
Notice of Direct Lease is given in accordance with the provisions of Section
3.14(c) hereof. The term 'Mortgagee" shall include the owners and holders of
the Notes, whether or not named as Mortgagee herein. If Mortgagor consists of
more than one entity, the liability of each Mortgagor hereunder shall be joint
and several.
(b) In this Mortgage, whenever the context so requires, the
masculine gender includes the feminine and/or neuter, and the singular number
includes the plural.
4.04 SEVERABILITY. If any provision hereof should be held
unenforceable or void, then such provision shall be deemed separable from the
remaining provisions and shall in no way affect the validity of this Mortgage
except that if such provision relates to the payment of any monetary sum, then,
Mortgagee may, at its option, declare the Secured Indebtedness immediately due
and payable.
4.05 APPLICABLE LAW. This Mortgage shall be construed and enforced
in accordance with the laws of the State.
4.06 CAPTIONS. The captions are inserted only as a matter of
convenience and for reference, and in no way define, limit, or describe the
scope or intent of this Mortgage, nor in any way affect this Mortgage.
4.07 TIME OF THE ESSENCE. Time shall be of the essence with respect
to all of Mortgagor's obligations under this Mortgage and the other Loan
Documents.
4.08 NO MERGER. In the event that Mortgagee should become owner of
the Property, there shall be no merger of the estate created by this Mortgage
with the fee estate (or underlying leasehold estate in the case of Mortgagee's
subleasehold interest) in the Property.
4.09 NO MODIFICATIONS. This Mortgage may not be changed, amended or
modified, except in a writing expressly intended for such purpose and executed
by Mortgagor and Mortgagee.
4.10 JURISDICTION AND VENUE: WAIVER OF JURY TRIAL. MORTGAGOR HEREBY
--------------------------------------------
ACKNOWLEDGES THAT THE TRANSACTION EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION.
MORTGAGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS (INCLUDING
-47-
<PAGE>
FEDERAL COURTS HAVING JURISDICTION IN THE COMMONWEALTH) OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B) WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO OBJECT TO JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM WITHIN
THE COMMONWEALTH OF MASSACHUSETTS, AND (H) TO THE RIGHT, IF ANY, TO CLAIM OR
RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN ACTUAL DAMAGES. MORTGAGOR AGREES THAT, IN ADDITION TO ANY METHODS OF
SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO MORTGAGOR AT THE ADDRESS SET FORTH ABOVE
(OR SUCH DIFFERENT ADDRESS PROVIDED IN THE MANNER SET FORTH FOR THE GIVING OF
NOTICES UNDER THIS INSTRUMENT), AND SERVICE SO MADE SHALL BE COMPLETE UPON
RECEIPT OR REFUSAL OF RECEIPT OF SUCH NOTICE. MORTGAGOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY JURISDICTION
AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE OBLIGATIONS, THE OTHER LOAN DOCUMENTS, OR ANY CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE MORTGAGOR AND THE MORTGAGEE. THIS WAIVER OF JURY
TRIAL SHALL BE EFFECTIVE FOR EACH AND EVERY DOCUMENT EXECUTED BY MORTGAGOR OR
MORTGAGEE, AND DELIVERED TO MORTGAGEE OR MORTGAGOR, AS THE CASE MAY BE, WHETHER
OR NOT SUCH DOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. MORTGAGOR FURTHER
CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
This Mortgage is upon the STATUTORY CONDITION and upon the further
condition that all covenants and agreements on the part of Mortgagor herein
undertaken shall be kept and fully and seasonably performed and that no breach
of any other of the conditions specified herein shall be permitted, for any
breach of which conditions, which breach is or becomes an Event of Default,
Mortgagee shall have the STATUTORY POWER OF SALE.
4.11. COUNTERPARTS. This Mortgage may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.
-48-
<PAGE>
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage. or has
caused this Mortgage to be executed, as a sealed instrument, by its duly
authorized representative(s) as of the day and year first written above.
WITNESS/ATTEST: COPLEY PLACE ASSOCIATES, LLC
a Delaware limited liability company
By: Overseas Partners Capital Corp.,
/s/Marcia Miller its managing member
-------------
By: /s/ Bruce M. Barone
-------------------
Its: President and CEO
-----------------
Hereunto duly authorized
/s/ Kevin C. Votta By: JMB Realty Corporation
- ------------------ Its Member
By: /s/ Elizabeth Kogan
-------------------
Its: Vice President
--------------
Hereunto duly authorized
URBAN INVESTMENT AND
DEVELOPMENT CO.
an Illinois general partnership
By: JMB Realty Corporation
its general partner
/s/ Stephanie C. Silvers By: /s/ Elizabeth Kogan
- ------------------------ -------------------
Its: Vice President
--------------
Hereunto duly authorized
<PAGE>
STATE OF GEORGIA)
) ss:
COUNTY OF DEKALB) July 30, 1997
Then personally appeared before me, the above named Bruce M. Barone,
---------------
President of Overseas Partners Capital corp., a Delaware corporation Managing
- ---------
Member of Copley Place Associates LLC, a Delaware limited liability company, who
executed the foregoing instrument as the free act and deed of said corporation
in its capacity as Managing Member of said limited liability company pursuant to
proper authorization of the members of such limited liability company, and as
the free act and deed of said limited liability company.
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires 12-12-2000
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogan, Vice
---------------------
President of JMB Realty Corporation., a Delaware corporation a member of
- ---------
Copley Place Associates LLC, a Delaware limited liability company, who executed
the foregoing instrument and acknowledged that he executed the foregoing
instrument as the free act an deed of said corporation in its capacity as member
of said liability company pursuant to proper authorization of the members of
such limited liability company, and as the free act and deed of said limited
liability company.
/s/ Lily H. Lee
---------------
Notary Public
My Commission Expires June 13, 1998
LILY H. LEE
Notary Public State of New York
No. 30-4934013
Qualified in Nassau County
Certified Filed in New York County.
Commission Expires June 13, 1998
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK ) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen, Vice
---------------------
President of JMB Realty Corporation., general partner of Urban Investment &
- ---------
Development Co., an Illinois general partnership, who executed the foregoing
instrument of Urban Investment and Development Co., an Illinois general
partnership, who executed the foregoing instrument and acknowledged that he
executed the foregoing instrument as the free act and deed of said corporation
in its capacity as general partner of said partnership pursuant to proper
authorization of the partners of said partnership, and as the free act and deed
of such partnership.
/s/ Lily H. Lee
---------------
Notary Public
My Commission Expires June 13, 1998
LILY H. LEE
Notary Public State of New York
No. 30-4934013
Qualified in Nassau County
Certified Filed in New York County.
Commission Expires June 13, 1998
<PAGE>
EXHIBIT "A-1"-
-------------
Master Lease Documents
- ----------------------
1. Lease dated December 22, 1978, by and between the Massachusetts
Transportation Authority ("MTA"), as landlord, and Urban Investment and
Development Co., a Delaware corporation ("URBAN"), as tenant.
2. Amended and Restated Lease dated January 31, 1980, by and
between the MTA and Urban.
3. Technical Memorandum dated November 12, 1980, by and between
MTA and Urban.
4. Amendment to Technical Memorandum dated December 15, 1980, by
and between MTA and Urban.
5. Second Amendment to Technical Memorandum dated May 18, 1981, by
and between MTA and Urban.
6. Notice of Lease dated May 27, 1981, by and between MTA and
Urban, recorded with the Suffolk Registry of Deeds in Book 9804, Page 1, and
filed with the Suffolk Registry District of the Land Court as Document No.
356809.
7. Non-Disturbance, Recognition and Direct Leasing Agreement dated
July 15, 1981, by and among MTA, Urban and Westban Hotel Venture ("WESTBAN"),
recorded in the Suffolk Registry of Deeds in Book 9805, Page 141.
8. Non-Disturbance, Recognition and Direct Leasing Agreement dated
January 12, 1982, by and among MTA, Urban and Marriott Urban Boston Venture
("MUBV"), recorded in the Suffolk Registry of Deeds in Book 16150, Page 94.
9. Non-Disturbance, Recognition and Direct Leasing Agreement dated
August 31, 1982, by and among MTA, Urban and UIDC of Massachusetts, Inc., a
Delaware corporation ("UIDC-MA"), recorded in the Suffolk Registry of Deeds in
Book 10056, Page 242'.
10. Instrument of Transfer by Urban to Urban Investment and
Development Co., an Illinois general partnership ("UIDC-MA"), dated December 24,
1996 and recorded in the Suffolk Registry of Deeds on March 6, 1990 in Book
16150, page 056 and filed with the Suffolk Registry District of the Land Court
as Document No. 462741.
11. Third Amendment to Technical Memorandum dated February 21, 1990,
by and between MTA and UIDC, as successor-in-interest to Urban.
A-1
<PAGE>
12. Amended Notice of Lease dated February 21, 1990, by and between
MTA and UIDC, recorded in the Suffolk Registry of Deeds in Book 16150, Page 072.
13. Notice of Direct Lease dated November 22, 1995, by and among
MTA,UIDC and MUBV, recorded in the Suffolk Registry of Deeds in Book 20322, Page
25.
14. Notice of Direct Lease dated ______________ by and among MTA,
UIDC and Westban, recorded in the Suffolk Registry of Deeds in Book ______, Page
____.
A-2
<PAGE>
EXHIBIT "A-2"
-------------
Central Area Sublease Documents
- -------------------------------
1. Sublease dated August 31, 1982, by and between Urban Investment
and Development Company, a Delaware corporation (URBAN") and UIDC of
Massachusetts, Inc. a Massachusetts Corporation ("UIDC-MA").
2. Central Area Notice of Sublease dated August 31, 1982, by
and between Urban and UIDC-MA, recorded in the Suffolk Registry of Deeds in Book
10056, Page 233.
3. Non-Disturbance, Recognition and Direct Leasing Agreement dated
August 31, 1982, by and among Massachusetts Turnpike Authority ("MTA"), Urban
and UIDC-MA, recorded in the Suffolk Registry of Deeds in Book 10056, Page 242.
4. Assignment of Tenant's Interest in Sublease dated September
1, 1983, by UIDC-MA to Urban, recorded in the Suffolk Registry of Deeds in Book
10592, Page 216.
5. Assignment of Tenant's Interest in Sublease dated September 1,
1983, by Urban to Carlyle Real Estate Limited Partnership XHI ("CARLYLE"),
recorded in the Suffolk Registry of Deeds in Book 10592, Page 225.
6. Assignment of Tenant's Interest in Sublease dated September 1,
1983,by Carlyle to Copley Place Associates, an Illinois general partnership
("CPA"), recorded in the Suffolk Registry of Deeds in Book 10592, Page 235.
7. Assignment of Tenant's Interest in Sublease dated September
1, 1983, by UIDC to CPA, recorded in the Suffolk Registry of Deeds in Book
10592, Page 246.
8. First Amendment of Central Area Air Rights Sublease dated March
21, 1985, by and between Urban and UIDC-MA, recorded in the Suffolk Registry of
Deeds in Book 11479, Page 339.
9. Assignment of Tenant's Interest in Sublease dated July 18, 1989,
by CPA to Copley Place Associates Nominee Corporation, a Delaware corporation
("NOMINEE"), recorded in the Suffolk Registry of Deeds in Book 15873, Page 232.
10. Merger of Nominee into Copley Place Associates, LLC, a Delaware
limited liability company ("COPLEY"), pursuant to a certificate of merger dated
July 24, 1997 and filed with the Suffolk County Registry of Deeds.
A-3
<PAGE>
EXHIBIT "A-3"
-------------
1. Lease dated March 7, 1986, by and between Boston Redevelopment
Authority ("BRA"), as landlord, and Urban Investment and Development Co., a
Delaware corporation ("URBAN"), as tenant.
2. Notice of Lease by and between UIDC and BRA, recorded on
December 19, 1986 with the Suffolk Registry of Deeds in Book 13215, Page 125,
and filed with the Suffolk County Registry District of the Land Court as
Document No. 41561 1.
Instrument of Transfer by Urban to Urban Investment and Development
Co., an Illinois general partnership ("UIDC"), dated December 24, 1996 and
recorded in the Suffolk Registry of Deeds on March 6, 1990 in Book 16150, page
056 and filed with the Suffolk Registry District of the Land Court as Document
No. 462741.
4. Amendment to Lease dated December 30, 1986, by and between BRA
and UIDC, recorded on with the Suffolk Registry of Deeds in Book 13321, Page
244, and filed with the Suffolk Registry District of the Land Court as Document
No. 416992.
5. Ratification of Amendment to Lease dated as of January 16, 1997
by UIDC [and recorded on March 31, 1997 with the Suffolk Registry of Deeds in
Book 21172, Page 343, and filed with the Suffolk Registry District of the Land
Court as Document No. 548456].
6. Assignment and Assumption of Ground Lease dated January 23, 1997
by and between UIDC and Copley Place Associates, LLC, a Delaware limited
liability company ("COPLEY") recorded on January 31, 1997 with the Suffolk
Registry of Deeds in Book 21178, Page 1, and filed with the Suffolk Registry
District of the land Court as Document No. 548459.
A-4
<PAGE>
EXHIBIT A-4
-----------
Marriott Garage Sublease Documents
- ----------------------------------
1. Sublease Agreement for Garage Facilities dated February 22,
1982, by and between Marriott Boston Urban Venture ("MUBV") and UIDC of
Massachusetts, Inc. a Massachusetts Corporation ("UIDC-MA").
2. Notice of Sublease dated February 22, 1982, by and between MLJBV
and UIDC-MA, recorded in the Suffolk County Registry of Deeds in Book 10011,
Page 178.
3. Assignment of Tenant's Interest in Sublease dated September 1,
1983, by UIDC-MA to Urban Investment and Development Co., a Delaware Corporation
("UIDC"), recorded in the Suffolk County Registry of Deeds in Book 10696, Page
163.
4. Assignment of Tenant's Interest in Sublease dated September 1,
1983, by UIDC to Carlyle Real Estate Limited Partnership XHI ("CARLYLE"),
recorded in the Suffolk County Registry of Deeds in Book 10696, Page 165.
5. Assignment of Tenant's Interest in Sublease dated September 1,
1983, by Carlyle to Copley Place Associates, an Illinois general partnership
("CPA"), recorded in the Suffolk County Registry of Deeds in Book 10696, Page
167.
6. Assignment of Tenant's Interest in Sublease dated September 1,
1983, by UIDC to CPA, recorded in the Suffolk County Registry of Deeds in Book
10696, Page 169.
7. Merger of CPA into Copley Place Associates, LLC, a Delaware
limited liability company ("COPLEY"), pursuant to a certificate of merger dated
__________________and filed with the _____________________________
A-5
<PAGE>
EXHIBIT "B-1"
-------------
DESCRIPTION OF REAL PROPERTY
CENTRAL AREA
------------
-1-
<PAGE>
EXHIBIT "B-2"
-------------
DESCRIPTION OF REAL PROPERTY
DARTHMOUTH STREET GARAGE
------------------------
B-1
<PAGE>
EXHIBIT "B-3"
-------------
DESCRIPTION OF REAL PROPERTY
MARRIOTT GARAGE
---------------
1
<PAGE>
EXHIBIT "C"
-----------
PERMITTED EXCEPTIONS
Exceptions set forth in Schedule B Part One of commitment to Issue Insurance No.
9663-00103-01 issued by Chicago Title Insurance Company as marked and redated
through the date hereof.
C-1
<PAGE>
EXHIBIT "D"
-----------
TO MORTGAGE AND SECURITY AGREEMENT
1. DEFINED TERMS
"County" shall mean Suffolk County.
"Debt Service" shall mean, for the annual period in question, the sum
of (i) the expenses of Mortgagor for such period for interest payable with
respect to the Secured Indebtedness and for fees payable hereunder, under the
other Loan Documents or in connection with such Secured Indebtedness, plus (ii)
----
all principal amounts payable during such period, in each case determined in
accordance with generally accepted accounting principles.
Default" shall mean any condition or occurrence which with notice
and/or the passage of time would be an Event of Default.
"Gross Income" shall be determined on an annual basis and shall mean
the sum of cash received during the annual period in question of Mortgagor in
payment of the following items:
(a) rentals, including minimum or base rent, percentage rent,
fees paid under the Management Agreements, and rent attributable
to recovery of tenant improvements costs received from tenants
occupying space in the Property during such year;
(b) cash reimbursements from tenants under Leases of
operating expenses, insurance premiums, and real estate taxes and
the cost of tenant improvements;
(c) parking revenues received in connection with the
operation of parking facilities;
(d) receipts from laundries, vending machines, recreational
facilities and any and all other operating revenues received from
the Property; and
(e) proceeds from business interruption insurance.
If Mortgagor shall receive cash by reason of fire or other casualty
insurance proceeds, or a taking by eminent domain, or a loan or advance or a
sale of any part of the Property or settlement of any litigation, such amounts
shall not be included in Gross Income.
Gross Income shall be determined on a cash basis consistent with the foregoing.
D-1
<PAGE>
The term "Hazardous Substances' shall include without limitation: (i)
those substances included within the definitions of "hazardous substances,"
"hazardous materials," "toxic substances," or "solid waste" in the Comprehensive
Environmental Response. Compensation and Liability Act of 1980 (42 U.S.C. 9601
et seq.) ("CERCLA"), as amended by Superfund Amendments and Reauthorization Act
of 1986 (Pub. L. 99-499 100 Stat. 1613) ("SARA"), the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. 6901 et seq.) ("RCRA"), and the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et seq., and in the regulations
promulgated pursuant to said laws, all as amended; (ii) those substances listed
in the United States Department of Transportation Table (49 CFR 172.101 and
amendments thereto) or by the Environmental Protection Agency (or any successor
agency) as hazardous substances (40 CFR Part 302 and amendments thereto); (iii)
any material, waste or substance which is (A) petroleum, (B) asbestos, (C)
polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. 251 et seq. (33 U.S.C. 1321) or
listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. (S) 1317); (E)
flammable explosives; or (F) radioactive materials; and (iv) any toxic or
hazardous waste, material or substance or any oil or pesticide listed in,
covered by, or regulated pursuant to, the Massachusetts Hazardous Material
Release and Response Act of 1983, Massachusetts General Laws, Chapter 21E, and
the regulations pertaining thereto, as heretofore or hereafter amended; and (v)
such other substances, materials and wastes which are or become regulated as
hazardous or toxic under applicable local, state or federal law, or the United
States government, or which are classified as hazardous or toxic under federal,
state, or local laws or regulations.
"Leasing Guidelines" shall mean the following guidelines for the
leasing of space at the Property:
(a) Form of Lease. All Leases shall be substantially on the
-------------
standard form of office or retail lease, as the case may be, which has been
approved by Mortgagee, which approval shall not be unreasonably withheld.
(b) Taxes and Expenses. Each retail Lease shall contain provisions
------------------
requiring the tenant thereunder to pay ITS proportionate share of operating
expenses and taxes and all office Leases shall contain provisions requiring the
tenant thereunder to pay, after the first year, its proportionate share of
increases in taxes and operating expenses.
(c) Tenn. Each retail Lease shall have a term of no less than one
----
(1) YEAR and no more than ten (10) years and each office Lease shall have a term
of no less than one (1) year and no more than fifteen (15) years.
(d) Fair Market R=. The rent under each Lease shall be on fair
-----------
market terms and the lease shall otherwise be on fair market terms.
(e) Option to Purchase. No Lease shall contain an option to
------------------
purchase all or any part of the Property.
D-2
<PAGE>
(f) No Default. At the time of entering into any Lease there must
----------
not currently exist an Event of Default under any of the Loan Documents.
"Net Income" shall be determined on an annual basis and shall mean the
amount by which the Gross Income of Mortgagor from the Property for the annual
period in question exceeds the aggregate of the following items for such annual
period:
(a) all operating costs and expenses incurred in the operation of the
Property including, without limitation, real estate taxes and
betterment assessments, management fees for the Property and cash
security deposits from tenants returned to tenants in cash to the
extent the same were included as a part of Gross Income; and
(b) funded reserves established for replacement and other purposes
for which funds are set aside in a separate account or accounts
paid in cash (or, in the case of reserves, set aside in cash) during such
period, but there shall not be deducted from Gross Income amounts paid from
funded reserves theretofore established. Without limitation, charges for income
taxes, capital gain taxes, corporate excise taxes and similar taxes, and
depreciation, amortization and other non-cash expenses shall not be deducted
from Gross Income in determining Net Income.
Net Income shall be determined on a cash basis, modified as described above.
"Rents and Profits" shall mean all and any income, rents, royalties,
revenue, issues, profits, proceeds, accounts receivable and other benefits now
or hereafter arising from the Property, or any part thereof.
"Requirements" shall' mean all requirements relating to land and
building construction, use and maintenance, including, without limitation,
planning, zoning, subdivision, environmental, air quality, flood hazard, fire
safety, handicapped facilities and other governmental approvals, permits,
licenses and/or certificates as may be necessary from time to time to comply
with any of the foregoing, and other applicable statutes, rules, orders,
regulations, laws, ordinances and covenants, conditions and restrictions, which
now or hereafter pertain to the design, construction, existence, operation or
use and occupancy of the Property, or any part thereof, or any business
conducted therein or thereon.
"State" shall mean the Commonwealth of Massachusetts, the state in
which the
Property is located.
2. ADDRESSES
Mortgagor's address:
Copley Place Associates, LLC
c/o Overseas Partners Capital Corp.
D-3
<PAGE>
115 Perimeter Center Place, Suite 940
Atlanta, Georgia 30346
Attention: Secretary
JMB Realty Corporation
900 North Michigan Ave.
Chicago, Illinois 60611
Attention: General Counsel
with a copy to:
Pircher Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Attn: Real Estate Notices (SCS)
Mortgagee's address:
Metropolitan Life Insurance Company
200 Park Avenue, 12th Floor
New York, New York 10166
Attention: Senior Vice-President
Real Estate Investments
Northeastern Office
and
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Vice-President & Investment Counsel
Real Estate Investments
D-4
<PAGE>
EXHIBIT "E"
-----------
TO MORTGAGE AND SECURITY AGREEMENT
REQUIREMENTS FOR RESTORATION
Unless otherwise expressly agreed in a writing signed by Mortgagee for
such purpose, the Requirements For Restoration shall be as follows:
(a) In the event the Net Insurance Proceeds are to be used for the
Restoration, Mortgagor shall, prior to the commencement of any work or services
in connection with the Restoration (the "Work"), deliver or furnish to Mortgagee
(i) complete plans and specifications for the Work which (A) have been approved
by all governmental authorities whose approval is required, (B) bear the signed
approval of an architect satisfactory to Mortgagee (the "Architect") and (C) are
accompanied by Architect's signed estimate of the total estimated cost of the
Work which plans and specifications shall be subject to Mortgagee's prior
approval (the "Approved Plans and Specifications"); (ii) the amount of money
which, as reasonably determined by Mortgagee, will be sufficient when added to
the Net Insurance Proceeds, if any, to pay the entire cost of the Restoration
(all such money as held by Mortgagee being herein collectively referred to as
the "Restoration Funds"); (iii) copies of all permits and approvals required by
law in connection with the commencement and conduct of the Work; (iv) a contract
for construction executed by Mortgagor and a contractor reasonably satisfactory
to Mortgagee (the "Contractor") in form, scope and substance reasonably
satisfactory to Mortgagee (including a provision for retainage) for performance
of the Work; and (v) if the work is in excess of $2,000,000, a surety bond for
and/or guarantee of payment for and completion of, the Work, which bond or
guarantee shall be (A) in form, scope and substance satisfactory to Mortgagee,
(B) signed by a surety or sureties, or guarantor or guarantors, as the case may
be, who are acceptable to Mortgagee, and (C) in an amount not less than
Architect's total estimated cost of completing the Work.
(b) Mortgagor shall not commence any portion of the Work, other than
temporary work to protect the Property or prevent interference with business,
until Mortgagor shall have complied with the requirements of subparagraph (a)
above. After commencing the Work, Mortgagor shall perform or cause Contractor
to perform the Work diligently and in good faith in accordance with the Approved
Plans and Specifications, So long as there does not currently exist an Event of
Default under any of the Loan Documents, Mortgagee shall disburse the
Restoration Funds in increments to Mortgagor, from time to time as the Work
progresses, to pay (or reimburse Mortgagor for) the costs of the Work, but
subject to the following conditions, any of which Mortgagee may waive in its
sole discretion: (i) Architect shall be in charge of the Work; (ii) Mortgagee
shall make such payments directly or through escrow with a title company
selected by Mortgagor and approved by Mortgagee, only upon not less than ten
(10) days' prior written notice from Mortgagor to Mortgagee and Mortgagor's
delivery to Mortgagee of (A) Mortgagor's written request for payment (a "Request
for Payment") accompanied by a certificate by Architect in form, scope and
substance satisfactory to Mortgagee which states that all of the Work completed
to that date
E-1
<PAGE>
has been done in compliance with the Approved Plans and Specifications and in
accordance with all provisions of law, that the amount requested has been paid
or is then due and payable and is properly a part of the cost of the Work and
that when added to all sums, if any, previously paid out by Mortgagee, the
requested amount does not exceed the value of the Work done to the date of such
certificate; (B) evidence reasonably satisfactory to Mortgagee that there are no
mechanic's or similar liens for labor or material supplied in connection with
the Work to date or that any such liens have been adequately provided for to
Mortgagee's satisfaction; and (C) evidence reasonably satisfactory to Mortgagee
that the balance of the Restoration Funds remaining after making the payments
shall be sufficient to pay the balance of the cost of the Work not completed to
date (giving in such reasonable detail as Mortgagee may require an estimate of
the cost of such completion). Each Request for Payment shall be accompanied by
(x) waivers of liens satisfactory to Mortgagee covering that part of the Work
previously paid for, if any, (y) a search prepared by a title company or by
other evidence satisfactory to Mortgagee that no mechanic's liens or other liens
or instruments for the retention of title in respect of any part of the Work
have been filed against the Property and not discharged of record, and (z) an
endorsement to Mortgagee's title policy insuring the Mortgagee that no
encumbrance exists on or affects the Property other than the Permitted
Exceptions; (iii) no Lease or Leases affecting in the aggregate more than 10% of
the leaseable area of the Property immediately prior to the damage or
destruction shall have been canceled, nor contain any still exercisable right to
cancel, due to such damage or destruction, or, if notwithstanding such canceled
Leases or Leases containing such right to cancel, the Net Income, in the
reasonable opinion of Mortgagee, derived from the Property shall be no less than
1.0 times annual Debt Service; and (iv) Any Request for Payment after the
Restoration has been completed shall be accompanied by a copy of any certificate
or certificates required by law to render occupancy of the Improvements legal.
(c) If (i) within ninety (90) days after the occurrence of any damage
or destruction to the Property requiring Restoration, Mortgagor fails to submit
to Mortgagee and receive Mortgagee's approval of plans and specifications or
fails to deposit with Mortgagee the additional amount necessary to accomplish
the Restoration as provided in subparagraph (a) above, or (ii) within 30 days
after such plans and specifications are approved by all such governmental
authorities and Mortgagee, Mortgagor fails to commence and diligently continue
to completion the Restoration, or (iii) subject to Section 1.16 hereof,
Mortgagor becomes delinquent in payment to mechanics, materialmen or others for
the costs incurred in connection with the Restoration, then, in addition to all
of the rights herein set forth and after 10 business days' written notice of the
non-fulfillment of one or more of the foregoing conditions, Mortgagee may apply
the Restoration Funds then or thereafter held by Mortgagee to reduce the Secured
Indebtedness in such order as Mortgagee may determine, and at Mortgagee's option
and in its sole discretion, Mortgagee may declare the Secured Indebtedness
immediately due and payable.
E-2
<PAGE>
EXHIBIT "F"
-----------
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
- -------------------------------------------------------
THIS AGREEMENT, is dated as of the _________ day of________________,
1997, among METROPOLITAN LIFE INSURANCE COMPANY, with an address of One
Madison Avenue, New York, NY 10010 (the "Mortgagee"),________________________,
with an address of ____________________________ (the "Tenant"), and COPLEY PLACE
ASSOCIATES,, LLC, with an address c/o Overseas Partners Capital Corp., 115
Perimeter Place, Suite 940, Atlanta, GA 30346 (the "Landlord").
WITNESSETH:
WHEREAS, Tenant is the tenant under a certain lease dated as of
____________, 19____, as the same may have been or may be amended (the
"Lease"), between Tenant and Landlord, covering premises located at
__________________ Suffolk County, Boston, Massachusetts, as more particularly
described in Exhibit A (the "Premises") which Premises are a part of the mixed-
---------
use retail/office project known as Copley Place, Boston, Massachusetts (the
"Property"); and
WHEREAS, Mortgagee has agreed to grant a loan to Landlord, which will
be secured by, among other things, a mortgage of the Premises (the "Mortgage")
and an assignment of rents and leases (the "Assignment"), both from Landlord to
Mortgagee, provided Tenant shall subordinate the tenant's interest in the Lease
and in the Premises as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the sum of ONE
DOLLAR ($1.00) by each party in hand paid to the other, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. The Lease, the terms thereof and all rights, options, liens or
charges created thereby, is and shall be subject and subordinate to the
Mortgage, the terms thereof and the lien created thereby insofar as it affects
the Premises and to all renewals, modifications, consolidations, replacements
and extensions thereof. Notwithstanding the foregoing, Tenant agrees that
Mortgagee may at any time, at its election, execute and record in the Suffolk
County Registry of Deeds, a notice of subordination reciting that the Lease
shall be superior to the lien of the Mortgage. From and after the recordation
of such notice of subordination the Lease shall be superior to the lien of the
Mortgage and shall not be extinguished by any foreclosure or sale thereunder.
2. Tenant agrees that it will attorn to and recognize Mortgagee upon
entry on the Premises for breach or default by Landlord under the Mortgage, any
purchaser at a foreclosure sale under the Mortgage, any transferee who acquires
the Premises by a deed in lieu or assignments in lieu of foreclosure, and the
successors and assigns of such purchasers (each of whom be referred to as a
"Foreclosure Purchaser"), as its landlord for the unexpired balance (and any
extensions, if exercised) of the term of the Lease, upon the same terms and
conditions set forth in the Lease except as otherwise specifically provided in
this Agreement. Alternatively, upon Mortgagee's or such Foreclosure Purchaser's
request, Tenant shall enter into a new lease with Mortgagee or such Foreclosure
Purchaser for such unexpired balance of
F-1
<PAGE>
the term of the Lease, upon the same terms and conditions set forth -in the
Lease except as otherwise specifically provided in this Agreement.
3. If it should become necessary to foreclose the Mortgage or if
Mortgagee shall otherwise take control of the Premises or succeed to the
interest of Landlord under the Lease, Mortgagee shall recognize Tenant's rights
thereunder, and shall not terminate the Lease nor join Tenant in summary
proceedings so long as Tenant is not then currently in default under any of the
terms, covenants, or conditions of the Lease.
4. Tenant agrees that it shall give Mortgagee a copy of each notice
of default delivered to Landlord with respect to any default under the Lease,
such notice shall be delivered to Mortgagee in hand or sent by registered or
certified mail to the address of Mortgagee set forth in Section 6 hereof and at
-------
the same time that such notice is delivered to Landlord. Tenant further agrees
that if Landlord shall have failed to cure such default within the time provided
for in the Lease (including any applicable grace periods), the Mortgagee shall
have an additional 60 days within which to cure such default, or, if such
default cannot be cured within that period, then such additional time as may be
necessary to effect such a cure if within such 60-day period Mortgagee has
commenced and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of foreclosure proceedings, if
necessary to effect such cure); and Tenant agrees that the Lease shall not be
terminated while such remedies are being pursued. Mortgagee shall in no event
be obliged to cure a default which is personal to Landlord, and therefore not
reasonably susceptible of cure by Mortgagee.
5. If Mortgagee shall succeed to the interest of Landlord under the
Lease, whether as Mortgagee in possession or otherwise, Mortgagee shall not be
(a) liable for any act or omission of any prior landlord (including Landlord);
(b) liable for the return of any security deposits (except such as have been
delivered to it); (c) subject to any offsets of defenses which Tenant might have
against any prior landlord (including Landlord); (d) bound by any rent or
additional rent which Tenant might have paid for more than the current month to
any prior landlord (including Landlord), except if such rent is delivered to
Mortgagee; (e) bound by any amendment or modification of the Lease made without
its consent except to the extent such amendment did not require the consent of
Mortgagee under the Mortgage and the Assignment; (f) bound by the consent of any
prior landlord (including Landlord) to any assignment or sublease of Tenant's
interest in the Lease made without also obtaining Mortgagee's prior written
consent (which shall not be unreasonably withheld); (g) liable or have any
obligation with respect to the completion of any tenant improvements to the
Premises; or (h) personally liable for any default under the Lease or any
covenant on its part to be performed thereunder, as landlord, or pursuant to
this Agreement it being acknowledged that Tenant's sole remedy in the event of
such default shall be to proceed against Mortgagee's equity interest (if any) in
the Premises.
6. Tenant hereby acknowledges that the entire interest of Landlord in
and to the Lease is being assigned to Mortgagee pursuant to the terms of the
Assignment. Tenant further acknowledges and agrees: (a) that the Lease cannot
be terminated by Landlord (either directly or by the exercise of any option
which could lead to termination) except in the event of a material default by
Tenant or modified in any of its terms (except to the extent such amendment did
not require the consent of Mortgagee under the Mortgage and the Assignment), or
consent be given to the release of any party having liability thereon by
Landlord, without the prior written consent of Mortgagee, and without such
consent, no rent may be collected or accepted by Landlord more than one month in
advance; (b) that upon
F-2
<PAGE>
notice from Mortgagee, whether or not Mortgagee shall have taken possession of
the Premises, Tenant shall pay all rent due under the Lease to Mortgagee at its
address set forth in the first paragraph hereof or to such other address as
Mortgagee shall specify; and (c) that any notice to be sent by Tenant to
Mortgagee shall be delivered in hand or sent by overnight express service,
registered or certified mail, addressed to Mortgagee at its address stated in
the first paragraph hereof. Any notices to be sent by Mortgagee to Tenant shall
be delivered in hand or sent by overnight express service, registered or
certified mail, addressed to _______________________, _________________________,
Attention: _______________________.
7. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
8. By execution hereof, Landlord consents to the execution hereof by
Tenant and agrees that such execution is not and shall not be or cause a default
under the Lease.
9. This Agreement shall run with the land and shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. A Foreclosure Purchaser shall be a successor and permitted
assignee of Mortgagee's rights and obligations under this Agreement. If a
Foreclosure Purchaser acquires the Premises or if Mortgagee assigns and
transfers its interest in the Note and Mortgage or the Property of which the
Premises are a part, all obligations and liabilities of Mortgagee under this
Agreement shall terminate and be the responsibility of the Foreclosure Purchaser
or other party to whom Mortgagee's interest is assigned or transferred. The
interest of Tenant under this Agreement may not be assigned or transferred
except in connection with an assignment of its interest in the Lease which has
been consented to by Mortgagee.
F-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument as of the date and year first above written.
METROPOLITAN LIFE INSURANCE
COMPANY
By:
-------------------------------
[TENANT]
By:
------------------------------
Name:
Title:
COPLEY PLACE ASSOCIATES, LLC
A Delaware Limited Liability Company
By Overseas Partners Capital Corp.,
Its Managing Member
By:
------------------------------
F-4
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
__________________________ss. ______ ______________, 1996
Then personally appeared the above-named _________________, who being duly
sworn, acknowledged said instrument to be his/her free act and deed and the free
act and deed of Metropolitan Life Insurance Company before me,
-----------------------
Notary Public
My commission expires:
COMMONWEALTH OF MASSACHUSETTS
__________________________ss. ______ ______________, 1996
Then personally appeared the above-named ________________________, of
_______________, who being duly sworn, acknowledged said instrument to be
his/her free act and deed and the free act and deed of Copley Place Associates,
LLC before me,
-----------------------
Notary Public
My commission expires:
COMMONWEALTH OF MASSACHUSETTS
__________________________ss. ______ ______________, 1996
Then personally appeared the above-named ________________________, of
_______________, ( ) who being
duly sworn, acknowledged said instrument to be his/her free act and deed and the
free act and deed before me,
- -------------
Notary Public
My commission
F-5
<PAGE>
Exhibit 10 (vvv)
<PAGE>
ASSIGNMENT OF LESSOR'S INTEREST IN LEASES
THIS ASSIGNMENT, made as of the 30th day of July, 1997 by COPLEY PLACE
ASSOCIATES, LLC, a limited liability company organized under the laws of the
State of Delaware with an address c/o Overseas Partners Capital Corp., 115
Perimeter Place, Suite 940, Atlanta, Georgia 30346 ("Assignor") to METROPOLITAN
LIFE INSURANCE COMPANY, as agent for the Holders (as defined in the Note,
hereinafter defined) of the Notes, a corporation duly organized and existing
under the laws of the State of New York having its principal office at One
Madison Avenue, New York, New York 10010 (herein called "Assignee").
WITNESSETH:
FOR VALUE RECEIVED, Assignor hereby grants, transfers, and assigns to
Assignee all of the right, title and interest of Assignor in and to those
certain Leases, with modifications, if any, described in Schedule A hereof and
all other leases, subleases and occupancy agreements now or hereafter entered
into, covering premises in Boston, Suffolk County, Commonwealth of Massachusetts
and the improvements thereon, which premises are more particularly described on
Exhibit A attached hereto and made a part hereof, other than the Ground Leases,
as defined in the Mortgage (as hereinafter defined); TOGETHER WITH ANY AND ALL
EXTENSIONS AND RENEWALS OF ANY THEREOF AND ALSO TOGETHER WITH ANY AND ALL
GUARANTEES OF THE LESSEE'S OBLIGATIONS UNDER ANY THEREOF AND UNDER ANY AND ALL
EXTENSIONS AND RENEWALS OF ANY THEREOF. Each of said Leases, and other leases,
subleases and occupancy agreements together with any and all guarantees,
modifications, extensions, and renewals thereof are hereinafter collectively
referred to as the "Leases".
FOR THE PURPOSE OF SECURING:
ONE: Payment of all sums now or at any time hereafter due to Assignee as
evidenced by that certain Class A Promissory Note in the principal amount of
$97,500,000.00, dated as of the date hereof, made by Assignor and Urban
Investment and Development Co. ("UIDC") and payable to the order of Metropolitan
Life Insurance Company ("Metlife") (the "Class A
<PAGE>
Note") and that certain Class B Promissory Note in the principal amount of
$97,500,000.00, dated as of the date hereof, made by Assignor and UIDC and
payable to the order of Metlife (the "Class B Note") (the Class A Note and the
Class B Note being hereinafter referred to collectively as the "Notes"), and
secured by a certain Leasehold Mortgage, Security Agreement and Fixture
Financing Statement made by Assignor and UIDC to Assignee of even date herewith,
and recorded or to be recorded at or prior to the recording of this Assignment,
as the same may be amended, modified, extended or consolidated (the "Mortgage";
terms used herein but not defined herein shall have the meanings ascribed
thereto in the Mortgage); and
TWO: Performance and discharge of each and every obligation, covenant and
agreement of Assignor and UIDC contained herein or in the Mortgage or in any of
the other Loan Documents.
A. TO PROTECT THE SECURITY OF THIS ASSIGNMENT ASSIGNOR
AGREES WITH RESPECT TO EACH LEASE AS FOLLOWS:
1. To faithfully abide by, perform and discharge, in all material
respects, each and every obligation, covenant and agreement of the Lease by
landlord under each Lease (each a "Lessor") to be performed, to give prompt
notice to Assignee of any notice of default on the part of Assignor with respect
to any Lease received by Assignor from the tenant under any Lease (each, a
"Lessee") or any guarantor of any Lease, together with an accurate and complete
copy of any such notice; at the sole cost and expense of Assignor, to enforce,
short of termination of Lease, or secure the performance, in all material
respects, of each and every obligation, covenant, condition and agreement of the
Lease by Lessee to be performed; not to modify or in any way alter the terms of
the Lease or to terminate the term of a lease, or accept a surrender thereof
except as provided in Section 1.10 of the Mortgage; not to anticipate the rents
thereunder more than two months in advance (except for security deposits), or to
waive, excuse, condone or in any manner release or discharge Lessee thereunder
of or from the obligations, covenants, conditions and agreements by Lessee to be
performed, including the obligation to pay the rental called for thereunder in
the manner and at the place and time specified therein except as provided in
Section 1.10 of the Mortgage and Assignor shall not
-2-
<PAGE>
modify or in any way alter the terms or provisions of any Lease, or terminate
the term or accept a surrender thereof except as provided in Section 1.10 of
the Mortgage.
2. At Assignor's sole cost and expense to appear in and defend any action
or proceeding arising under, growing out of or in any manner connected with any
Lease or the obligations, duties or liabilities of Lessor, Lessee or guarantor
thereunder, and to pay all reasonable costs and expenses of Assignee, including
attorneys' fees in a reasonable sum, in any such action or proceeding in which
Assignee may be joined.
3. That should Assignor fail to make any payment or to do any act as herein
provided beyond any applicable grace period therefor set forth in Section 2.01
of the Mortgage, then Assignee, but without obligation so to do and without
further notice or demand on Assignor, and without releasing Assignor from any
obligation hereof, may make or do the same in such manner and to such extent as
Assignee may deem necessary to protect the security hereof, including
specifically, without limiting its general powers, the right to appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Assignee, and also the right to perform and discharge each
and every obligation, covenant and agreement of Lessor in the Lease contained;
and in exercising any such powers to pay necessary costs and expenses, employ
counsel and incur and pay reasonable attorneys fees.
4. To pay all sums expended by Assignee under the authority hereof in
accordance with Section 3. 10 of the Mortgage, together with interest thereon at
the Default Rate as provided in the Notes, and the same shall be added to the
Secured Indebtedness and shall be secured hereby and by the Mortgage.
I. ASSIGNOR HEREBY COVENANTS AND WARRANTS WITH
RESPECT TO EACH LEASE THAT:
1 . Assignor has not executed any prior assignment of the Lease or
of its right, title and interest therein or the rentals to accrue thereunder,
that will not be released upon the funding of the loan evidenced by the Notes
(the "Loan").
-3-
<PAGE>
2. Assignor has not performed any act or executed any instrument
which would prevent Assignee from operating under any of the terms and
conditions hereof, or which would limit Assignee in such operation.
3. Except for security deposits, Assignor has not accepted rent under
the Lease for more than two months in advance of the current period for which
rent has already become due and payable.
4. Assignor has not executed or granted any modification or amendment
whatever of the Lease either orally or in writing except as set forth in
Schedule A, and that to Assignor's knowledge each Lease is in full force and
effect.
11. IT IS MUTUALLY AGREED WITH RESPECT TO EACH LEASE THAT:
1. So long as there shall exist no Event of Default, Assignor shall
have the right to collect upon but not more than one month prior to accrual, all
rents, issues and profits from said demised premises and to retain, use and
enjoy the same and to enforce same in the sole name of Assignor.
2. Upon or at any time after an Event of Default, Assignee may
exercise all rights and remedies contained herein or in the Mortgage and without
regard for the adequacy of security for the Secured Indebtedness, either in
person or by agent with or without bringing any action or proceeding, or by a
receiver to be appointed by a court, enter upon, take possession of, manage and
operate said demised premises or any part thereof, make, enforce, modify, and
accept the surrender of, Leases, obtain and evict tenants, fix or modify rents,
and do any acts which Assignee deems proper to protect the security hereof, and
either with or without taking possession of said property, in its own name sue
for or otherwise collect and receive all rents, issues and profits, including
those past due and unpaid, and apply the same, less costs and expenses of
operation and collection, including reasonable attorneys' fees, upon any Secured
Indebtedness, and in such order as Assignee may determine. The entering upon
and taking possession of said property, the collection of such rents, issues and
profits and the
-4-
<PAGE>
the application thereof as aforesaid, shall not cure or waive any default
or waive, modify or affect notice of default under the Mortgage or invalidate
any act done pursuant to such notice.
3. Assignee shall not be obligated to perform or discharge, any
obligation, duty or liability under the Lease, or under or by reason of this
Assignment, and Assignor shall and does hereby agree to indemnify Assignee
against and hold it harmless from any and all liability, loss or damage (other
than consequential damages or that which results from Assignee's or its agent's
or receiver's gross negligence or willful disregard of its obligations
hereunder) which it may or might incur under the Lease or under or by reason of
this Assignment and of and from any and all claims and demands whatsoever which
may be asserted against it by reason of any alleged obligation or undertaking on
its part to perform or discharge any of the terms, covenants or agreements
contained in the Lease; should Assignee incur any such liability, loss or damage
under the Lease or under or by reason of this Assignment, or in the defense
against any such claims or demands, the amount thereof, including costs,
expenses and reasonable attorneys' fees, together with interest thereon as
provided in Section 3.10 of the Mortgage, shall be secured hereby and by the
Mortgage and Assignor shall reimburse Assignee therefor in accordance with
Section 3.10 of the Mortgage.
III IT IS FURTHER MUTUALLY AGREED THAT:
1. Until the Secured Indebtedness shall have been paid in full,
Assignor covenants and agrees to keep leased or to use its good faith efforts to
lease at a good and sufficient rental in accordance with the terms of Section
1.10 of the Mortgage all the premises described in the Mortgage and upon demand
to transfer and assign to Assignee any and all subsequent Leases upon all or any
part of such premises upon the same or substantially the same terms and
conditions as are herein contained, and to make, execute and deliver to
Assignee, upon demand, any and all instruments that may be necessary or
desirable therefor, but the terms and provisions of this Assignment shall apply
to any such subsequent Lease whether or not so assigned and transferred.
2. Upon the payment in full of all Secured Indebtedness, as
evidenced by the recording or filing of an instrument of satisfaction or full
release of the Mortgage, unless there
-5-
<PAGE>
shall have been recorded another mortgage or deed of trust in favor of Assignee
covering the whole or any part of the demised premises, this Assignment shall
become and be void and of no effect. In such event, Assignee shall execute,
acknowledge and deliver such instrument of termination with respect to this
Assignment as shall be reasonably requested by Assignor.
3. This Assignment inures to the benefit of the named Assignee and
its successors and assigns, and binds Assignor and Assignor's heirs, legatees,
devisees, administrators, executors, successors and assigns. The term "Lease"
as used herein means not only the Lease hereby assigned or any extension or
renewal thereof, but also any Lease subsequently executed by Assignor covering
the demised premises or any part thereof. In this assignment, whenever the
context so requires, the neuter gender includes the masculine or feminine, and
the singular number includes the plural, and conversely. All obligations of
each Assignor hereunder are joint and several.
4. All notices, demands or documents which are required or permitted
to be given or served hereunder shall be in writing and sent in the same manner
and to the same addresses and representatives of Assignor and Assignee as
provided in Section 4.02 of the Mortgage.
5. A written demand on any tenant by Assignee for payment of rent to
Assignee shall be sufficient warrant to said tenant to pay all rents, income,
issues and profits to Assignee without necessity for consent by Assignor or any
further evidence of a default by Assignor and notwithstanding any claim by
Assignor to the contrary, and Assignor hereby irrevocably authorizes and directs
and requires all tenants of the premises described in the Mortgage to honor this
Assignment of Lessor's Interest in Leases and comply with any such demand by
Assignee until further written notice by Assignee authorizing the tenant to
resume rent payments to Assignor. Assignor shall have no claim against any
tenant for any amounts paid to Assignee hereunder. Assignee shall not make such
a demand for rents, income, issues and profits unless and until an Event of
Default shall have occurred and be continuing.
6. Upon request from Assignee, Assignor shall provide to Assignee,
at no cost to Assignee, copies of all executed Leases now or hereafter affecting
the premises described in the Mortgage.
-6-
<PAGE>
7. All commissions and fees arising out of, or connected with, the
Lease shall be subordinate to the Mortgage and to this Assignment.
8. Upon demand, Assignor agrees, if legally permissible, to assign
and transfer to Assignee as additional security for the Loan all security
deposits field by Assignor pursuant to the Lease.
9. This Assignment is to be construed and enforced in all respects
in accordance with the laws of the Commonwealth of Massachusetts.
10. In the event of a conflict between the terms of this Assignment
and those of the Mortgage, the terms of the Mortgage shall govern.
11. The liability of Assignor hereunder shall be subject to the
same limitations (and exceptions to such limitations) as apply to Mortgagor
under Section 1.17 of the Mortgage.
12. ASSIGNOR HEREBY ACKNOWLEDGES THAT THE TRANSACTION EVIDENCED
HEREBY IS A COMMERCIAL TRANSACTION. ASSIGNOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF
MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (1) TO OBJECT TO JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR
VENUE IN ANY PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS
(INCLUDING FEDERAL COURTS HAVING JURISDICTION IN THE COMMONWEALTH), AND (II) TO
THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN ACTUAL DAMAGES. ASSIGNOR AGREES
THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO ASSIGNOR AT THE ADDRESS SET FORTH ABOVE (OR SUCH DIFFERENT ADDRESS PROVIDED
IN THE MANNER SET FORTH FOR THE GIVING OF NOTICES UNDER THIS INSTRUMENT), AND
SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT OR REJECTION OF RECEIPT OF THE
NOTICE. ASSIGNOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO,
IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM OR DISPUTE
-7-
<PAGE>
HOWSOEVER ARISING, BETWEEN ASSIGNOR AND ASSIGNEE. THIS WAIVER OF JURY TRIAL
SHALL BE EFFECTIVE FOR EACH AND EVERY DOCUMENT EXECUTED BY ASSIGNOR OR ASSIGNEE,
AND DELIVERED TO ASSIGNEE OR ASSIGNOR, AS THE CASE MAY BE, WHETHER OR NOT SUCH
DOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. ASSIGNOR FURTHER CONFIRMS THAT
THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
13. The provisions of Section 1.17 of the Mortgage are incorporated
herein by reference as if herein set forth in full and shall be fully applicable
to this instrument.
14. This Assignment may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which together
shall constitute but one and the same instrument.
-8-
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed
by its duly authorized representatives as of the day and year first written
above.
WITNESS/ATTEST: ASSIGNOR:
COPLEY PLACE ASSOCIATES, LLC
a Delaware limited liability company
/s/ Marcia M. Miller By: Overseas Partners Capital Corp.,
- -------------------- Its managing member
By: /s/ Bruce M. Barone
--------------------
Its President and CEO
Hereunto duly authorized
/s/ Stephanie C. Silvers By: JMB Realty Corporation
- ------------------------ an Illinois corporation, its member
By: /s/ Elizabeth Kogen
--------------------
Its Vice President
Hereunto duly authorized
<PAGE>
STATE OF Georgia )
) SS:
COUNTY OF Dekalb ) July 30, 1997
Then personally appeared before me, the above name Bruce M. Barone,
President of Overseas Partners Capital Corp., a Delaware corporation, managing
member of Copley Place Associates, LLC, a Delaware limited liability company,
who executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as the Managing Member of said limited liability company pursuant to
proper authorization of the members of such limited liability company, and as
the free act and deed said limited liability company.
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires: 12/2/2000
STATE of New York )
) SS:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen,
Vice President of JMB Realty Corporation, a Delaware corporation, a member of
Copley Place Associates, LLC, a Delaware limited liability company, who executed
the foregoing instrument and acknowledged that he executed the foregoing
instrument as the free act and deed of said corporation in its capacity as a
member of said limited liability company pursuant to proper authorization of the
members of such limited liability company, and as the free act and deed of said
limited liability company.
/s/ Frank S. Caiazzo
---------------------
Notary Public
My Commission Expires:
FRANK S. CAIAZZO
Notary Public, State of New York
No. 43-4777178
Qualified in Richmond County Certificate filed
in New York County.
Commission Expires March 30, 1998
<PAGE>
SCHEDULE A
TO
ASSIGNMENT OF LESSOR'S INTEREST IN LEA@IE
-----------------------------------------
All leases now existing or hereafter entered into with respect to any
portion of land and improvements commonly known as Copley Place Central Area,
located at 100 Huntington Avenue, Boston, Suffolk County, Massachusetts,
including without limitation, the following leases:
-11-
<PAGE>
Exhibit 10 (www)
<PAGE>
COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
IN REGARD TO
CONTRACTS, LICENSES, PERMITS, AGREEMENTS,
WARRANTIES AND APPROVALS
- --------------------------------------------------------------------------------
THIS ASSIGNMENT, made this 30th day of July, 1997 by COPLEY PLACE
ASSOCIATES LLC, a Delaware limited liability company, with a principal address
c/o Overseas Partners Capital Corp., 115 Perimeter Center Place, Suite 940,
Atlanta, Georgia 30346 (hereinafter referred to as "Assignor") to METROPOLITAN
LIFE INSURANCE COMPANY, as agent for the Holders (as defined in the Notes,
hereinafter defined) of the Notes, (hereinafter referred to as "Assignee"), a
New York corporation with its principal office at One Madison Avenue, New York,
New York 10010.
W I T N E S S E T H:
--------------------
THAT Assignor, for good and valuable consideration, receipt and sufficiency
of which is hereby acknowledged, does hereby grant, transfer and assign to
Assignee for and in respect of the property described in Exhibit "A" attached
hereto and made a part hereof and the improvements thereon (the "Property") a
security interest in and also hereby assigns, transfers and sets over to
Assignee (to the extent assignable as to governmental permits) all of Assignor's
right title and interest in and to all contracts, licenses, permits, agreements,
warranties and approvals now owned or hereafter acquired by Assignor (such
contracts, licenses, permits, agreements, warranties and approvals, as are now
so owned or hereafter acquired are referred to herein as the "Contracts"). For
the purposes of this instrument, the term "Contracts" shall include, without
limitation, all of Assignor's right, title and interest in and to the Management
Agreements (as defined in the Mortgage referred to in paragraph (b) below).
The following sets forth the obligations and instruments secured by this
Collateral Assignment and Security Agreement:
(a) Payment of Assignor's and Urban Investment and Development Co.'s
("UIDC") debt (the "Loan") to Assignee in the original principal sum of ONE
HUNDRED NINETY-FIVE MILLION and 00/100 Dollars ($195,000,000.00) (the "Loan
Amount") evidenced by a certain Class A Promissory Note in the original
principal amount of $95,000,000.00, made by Assignor and UIDC to
Metropolitan Life Insurance Company, of even date herewith ("Class A Note")
and a certain Class B Promissory Note in the original principal amount of
$95,000,000.00, made by Assignor and UIDC to Metropolitan Life Insurance
Company, of even date herewith ("Class B Note") (the Class A Note and the
Class B Note being hereinafter referred to collectively as the "Notes");
(b) Payment and performance of all liabilities and obligations of Assignor
and UIDC to Assignee under that certain Leasehold Mortgage, Security
Agreement
<PAGE>
and Fixture Financing Statement (the "Mortgage") which, among other
things, secures the Notes and is of even date herewith;
(c) Payment and performance of all liabilities and obligations of Assignor
and/or UIDC to Assignee under the terms of any other document or
instrument now or hereafter executed or delivered in connection with
the Loan; and
(d) Performance of all conditions and obligations contained in this
Assignment.
The aforesaid obligations, agreements and instruments shall be collectively
referred to herein as the "Secured Obligations and Instruments".
This Assignment is made and accepted upon the following terms and conditions:
1. Assignor hereby agrees (i) to perform in a timely manner in all
material respects all its obligations, covenants, conditions and agreements
under the Contracts and (ii) to use all reasonable efforts to enforce
performance by each other party thereto of each and every obligation, covenant,
condition and agreement to be performed by such other party under the Contracts.
Assignor shall not suffer or permit any default on its part to exist under the
Secured Obligations and Instruments to continue beyond applicable cure periods,
if any (such a default which is not cured within applicable cure periods, if
any, being referred to herein as a "Default"). So long as no Default shall
exist, Assignor shall have all the rights as the holder thereof in and with
respect to the Contracts as may be lawfully permitted.
2. Immediately upon the occurrence of any Default, the right described in
the foregoing paragraph 1 hereof shall cease and terminate (subject to the
provisions of Section 3.13 of the Mortgage and the Estoppel and Subordination
Agreements of even date herewith ("E.S.A.'s") with respect to the Management
Agreements), and in such event Assignee is hereby expressly and irrevocably
authorized, but not required, to exercise every right, option, power or
authority inuring to Assignor under any one or more of the Contracts as fully as
Assignor could itself.
Further, and without limitation of the foregoing remedies, upon the
occurrence of any Default, Assignee shall have the rights and remedies of a
secured party under the Uniform Commercial Code, as enacted in the Commonwealth
of Massachusetts, for each and every Contract, in addition to the rights and
remedies otherwise provided for by law or in equity or in any other agreement
between the parties or under any guaranty of Assignor's obligations, including
without limitation, all rights and remedies. Assignee shall give Assignor 10
days' prior written notice of the time and place of any public sale of any such
Contract or the time after which any private sale or any other intended
disposition is to be made. After deducting all expenses incurred in connection
with the enforcement of its rights hereunder, Assignee shall cause the proceeds
of the Contracts to be applied to the payment of principal or interest on
Assignor's indebtedness to Assignee in such order as Assignee may determine, and
Assignor shall remain liable for any deficiency.
<PAGE>
3. Assignor hereby irrevocably directs the grantor or licensor of or the
contracting party to any such Contract to the extent not prohibited by such
Contract and under any recognition or other agreement, if any, executed by such
grantor, licensor or contracting party, upon demand of Assignee and after notice
from Assignee of Assignor's Default (but subject to Section 3.13 of the Mortgage
and the E.S.A.'s), to recognize and accept Assignee as the holder of such
Contract for any and all purposes as fully as it would recognize and accept
Assignor and the performance of Assignor thereunder, without any obligation on
the part of any such grantor, licensor or contracting party to determine whether
a Default has in fact occurred.
4. Assignor hereby agrees to indemnify and hold Assignee harmless against
and from all liability, loss, damage (excluding consequential damages) and
reasonable expenses, including reasonable attorneys' fees, which it may or shall
incur by reason of this Assignment, or by reason of any action taken in good
faith by Assignee in the exercise of its rights hereunder, and against and from
any and all claims and demands whatsoever which may be asserted against Assignee
by reason of any alleged obligation or undertaking on its part to perform or
discharge any of the terms, covenants and conditions contained in the Contracts.
Should Assignee incur any such liability, loss, damage or expense (other than
that which results from Assignee's or its agent's gross negligence or its
willful disregard of its obligations hereunder), the amount thereof, together
with interest thereon at the Default Rate of interest under the Notes, shall be
payable by Assignor to Assignee immediately upon demand, or, at the option of
Assignee, Assignee may reimburse itself therefor out of any receipts, rents,
income or profits of the Property collected by Assignee before the application
of such receipts, rents, income or profits to any other obligation of Assignor
hereunder or under the Secured Obligations and Instruments.
5. Nothing contained herein shall operate or be construed to obligate
Assignee to perform any of the terms, covenants or conditions contained in the
Contracts or otherwise to impose any obligation upon Assignee with respect to
the Contracts prior to written notice by Assignee to Assignor of Assignee's
election to assume Assignor's obligations under one or more of the Contracts.
Prior to said election this Assignment shall not operate to place upon Assignee
any responsibility for the operation, control, care, management or repair of the
Property or for the payment, performance or observance of any obligation,
requirement or condition under any such Contract pursuant to the terms hereof or
under any agreement in respect to any such Contract, and the execution of this
Assignment by Assignor shall constitute conclusive evidence that all
responsibility for the operation, control, care, management and repair of the
Property as well as the payment, performance or observance of any obligation,
requirement or condition under the Contracts is and shall be that of Assignor,
prior to such election.
6. Assignor represents and warrants to Assignee that (i) it lawfully
holds the rights and interests of Assignor in the Contracts, (ii) it has the
right to assign to Assignee its interest under each said Contract, as of the
date hereof, (iii) it has received all necessary consents and approvals to such
assignment and has not sold, assigned, transferred, mortgaged or pledged any
such right or interest under the Contracts to any person other than Assignee
that will not
<PAGE>
be released on the funding of the Loan, and (iv) it is not in default of any of
its obligations under the Contract which exist as of the date of execution
hereof and is not aware of any defaults of any other parties of any of their
obligations under such Contracts. Assignor shall not, without the prior written
consent of Assignee, sell, assign, transfer, mortgage or pledge any Contract or
any such right or interest under any Contract.
7. Assignor agrees to execute and deliver to Assignee, at any time or
times during which this Assignment shall be in effect, such further instruments
as Assignee reasonably may deem necessary to make effective this Assignment, the
security interest created hereby and the several covenants of Assignor herein
contained. To evidence such security interest, at the request of Assignee,
Assignor shall, in a form satisfactory to Assignee, join with Assignee in
executing one or more financing statements, and any continuation thereof,
pursuant to the provisions of the Uniform Commercial Code as enacted in
Massachusetts, and shall pay the cost for filing thereof. Further, promptly
upon any Contract coming into existence after the date hereof, Assignor agrees
to deliver a copy thereof to Assignee, together with any consent or recognition
agreement related thereto which Assignee may require.
8. Failure of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment for any period of time or at any time or times,
shall not be construed or deemed to be a waiver of any of its rights hereunder.
The rights and remedies of Assignee under this instrument are cumulative and are
not in lieu of but are in addition to any other rights and remedies which
Assignee shall have under or by virtue of the Secured Obligations and
Instruments. The rights and remedies of Assignee hereunder may be exercised
from time to time and as often as such exercise is deemed expedient by Assignee.
9. Assignee shall have the right to assign to any subsequent holder of any
of the Secured Obligations and Instruments or to any person acquiring title to
the Property, the Contracts and all the right, title, interest, power and
authority of Assignor in, under and by virtue of the Contracts hereby or
hereafter assigned, subject, however, to the provisions of this Assignment, the
Contracts and any agreement collateral thereto.
10. Upon full payment of the Secured Obligations, this Assignment shall
terminate and, in that event, upon the request of Assignor, Assignee covenants
to execute and deliver to Assignor instruments effective to evidence the
termination of this Assignment and the reassignment to Assignor of the Contracts
and the rights, title, interest, power and authority assigned herein; provided,
however, that, as to Assignor, any affidavit, certificate or other written
statement of any officer of Assignee, stating that any part of said indebtedness
remains unpaid, shall be and constitute conclusive evidence of the then
validity, effectiveness and continuing force of this Assignment and any person,
firm or corporation receiving any such affidavit, certificate or statement may,
and is hereby authorized to, rely thereon.
11. Assignor agrees to provide Assignee with copies of any and all notices
(i) received by Assignor which allege, either directly or indirectly, that
Assignor is delinquent or deficient in the performance of the terms of any
obligation of Assignor under any Contract, promptly after receipt thereof
and (ii) sent by Assignor which allege, either directly or
<PAGE>
indirectly, that any other party to a Contract is in breach of any of its
obligations thereunder, promptly after transmittal thereof. Upon receipt of any
notice described in (i) above, whether or not a Default shall have occurred,
upon 10 business days advance written notice (unless an emergency situation
requires more immediate action, in which case no prior notice need be given),
Assignee may elect, but shall not be obligated to, cure any such alleged
delinquency or deficiency by Assignor, and to treat all sums expended in
connection therewith as amounts advanced under the Notes and secured by the
Mortgage and the Assignment of Lessor's Interest in Leases executed and
delivered by Assignor in connection therewith. Assignor further covenants that,
without the prior written consent of Assignee, Assignor will not permit or agree
to any cancellation, abridgment, amendment, extension, renewal or modification
of any of the terms, covenants and conditions of any Contract, provided that
with respect to modifications or amendments, Assignee's consent shall not be
reasonably withheld.
12. No change, amendment, modification, cancellation or discharge hereof,
or of any part hereof, shall be valid unless Assignee shall have consented
thereto in writing.
13. In case of any conflict between the terms of this Assignment and the
terms of the Mortgage, the terms of the Mortgage shall prevail and be
controlling.
14. Assignor agrees that, notwithstanding any action by Assignee to
enforce its rights under any of the Secured Obligations and Instruments, this
Assignment shall survive as security for any of the other Secured Obligations
and Instruments.
15. Wherever by the terms of this Assignment notice shall or may properly
be given to the parties hereto, the same shall always be sufficient if in
writing and given in the manner set forth for the provision of notice under the
Mortgage.
16. The liability of Assignor hereunder shall be subject to the same
limitations (and exceptions to such limitations) as apply to Mortgagor under
Section 1.17 of the Mortgage.
17. ASSIGNOR HEREBY ACKNOWLEDGES THAT THE TRANSACTION EVIDENCED HEREBY IS
A COMMERCIAL TRANSACTION. ASSIGNOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMITS TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B)
WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO OBJECT TO
JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR
FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS (INCLUDING FEDERAL COURTS HAVING
JURISDICTION IN THE COMMONWEALTH), AND (II) TO THE RIGHT, IF ANY, TO CLAIM OR
RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN ACTUAL DAMAGES. ASSIGNOR AGREES THAT, IN ADDITION TO ANY METHODS OF
SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO
<PAGE>
ASSIGNOR AT THE ADDRESS SET FORTH ABOVE (OR SUCH DIFFERENT ADDRESS PROVIDED IN
THE MANNER SET FORTH FOR THE GIVING OF NOTICES UNDER THIS INSTRUMENT), AND
SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT OR REFUSAL OF RECEIPT OF THE
NOTICE. ASSIGNOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO,
IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN ASSIGNOR AND
ASSIGNEE. THIS WAIVER OF JURY TRIAL SHALL BE EFFECTIVE FOR EACH AND EVERY
DOCUMENT EXECUTED BY ASSIGNOR OR ASSIGNEE, AND DELIVERED TO ASSIGNEE OR
ASSIGNOR, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENT SHALL CONTAIN A
WAIVER OF JURY TRIAL. ASSIGNOR FURTHER CONFIRMS THAT THE FOREGOING WAIVERS ARE
INFORMED AND FREELY MADE.
18. THIS ASSIGNMENT shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, to the maximum extent permissible
according to law.
19. THIS ASSIGNMENT, together with the covenants and warranties herein
contained, shall inure to the benefit of Assignee and any subsequent Assignee of
any of the Notes and/or the Mortgage and shall be binding upon Assignor, its
heirs, executors, administrators, successors and assigns and any subsequent
owner of the Property.
20. The provisions of Section 1.17 of the Mortgage are incorporated herein
by reference as if set forth in full and shall be fully applicable to this
Agreement.
21. This Assignment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed by its
duly authorized representatives as of the day and year first written above.
WITNESS/ATTEST: ASSIGNOR:
COPLEY PLACE ASSOCIATES, LLC
a Delaware limited liability company
/s/ Marcia M. Miller By: Overseas Partners Capital Corp.,
- -------------------- Its managing member
By: /s/ Bruce M. Barone
--------------------
Its President
Hereunto duly authorized
/s/ Stephanie C. Silvers By: JMB Realty Corporation
- ------------------------ an Illinois corporation, its member
By: /s/ Elizabeth Kogen
--------------------
Its Vice President
Hereunto duly authorized
<PAGE>
ACKNOWLEDGEMENT PAGE
--------------------
STATE OF Georgia )
) SS:
COUNTY OF Dekalb ) July 30, 1997
Then personally appeared before me, the above name Bruce M. Barone,
President of Overseas Partners Capital Corp., a Delaware corporation, managing
member of Copley Place Associates, LLC, a Delaware limited liability company,
who executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as the Managing Member of said limited liability company pursuant to
proper authorization of the members of such limited liability company, and as
the free act and deed said limited liability company.
/s/ Eloise R. Kitchens
----------------------
Notary Public
My Commission Expires: 12/2/2000
STATE OF New York )
) SS:
COUNTY OF New York ) July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen,
Vice President of JMB Realty Corporation, a Delaware corporation, a member of
Copley Place Associates, LLC, a Delaware limited liability company, who executed
the foregoing instrument and acknowledged that he executed the foregoing
instrument as the free act and deed of said corporation in its capacity as a
member of said limited liability company pursuant to proper authorization of the
members of such limited liability company, and as the free act and deed of said
limited liability company.
/s/ Lily H. Lee
---------------
Notary Public
My Commission Expires: June 13, 1998
LILY H. LEE
Notary Public, State of Now York
No.30-4934013
Qualified in Nassau County Certificate filed
in New York County.
Commission Expires June 13, 1998
<PAGE>
Exhibit 10 (xxx)
<PAGE>
GUARANTY AGREEMENT
------------------
THIS GUARANTY AGREEMENT (hereinafter referred to as this "Guaranty'), dated as
of July 30, 1997, is made by Overseas Partners Capital Corp., a Delaware
corporation ("OPCC"), and JMB Realty Corporation, a Delaware corporation
("JMB"), (hereinafter referred to collectively as "Guarantor"), in favor of
Metropolitan Life Insurance Company, as agent for the Holders (as defined in the
Notes, hereinafter defined) of the Notes, a New York corporation, whose address
is One Madison Avenue, New York, New York 10010 ("MetLife").
WITNESSETH:
WHEREAS, OPCC and JMB are both members of Copley Place Associates, LLC (Copley
and its successors and permitted assigns being hereinafter referred to as
Copley"), a Delaware limited liability company, whose address is 115 Perimeter
Center Place, Suite 940, Atlanta, Georgia, and JMB is the Managing General
Partner of Urban Investment and Development Co. ("UIDC"), an Illinois general
partnership, whose address is 900 North Michigan Avenue, Chicago, Illinois 60611
(Copley and UIDC hereinafter referred to collectively as "Borrower"). Prior to
the date hereof, Metropolitan Life Insurance Company and Copley entered into a
mortgage loan commitment (hereinafter referred to as the " Commitment") with
respect to the making by Metropolitan Life Insurance Company of a mortgage loan
(hereinafter referred to as the "Loan") in the amount of One Hundred Ninety-Five
Million and 00/100 Dollars ($195,000,000.00) to Borrower, the terms, provisions,
<PAGE>
covenants and conditions of which were set forth in that certain Mortgage Loan
Application, dated June 18, 1997, and accepted by Metropolitan Life Insurance
Company on July 23, 1997;
WHEREAS, the Loan is evidenced by that certain Class A Promissory Note
in the principal amount of $97,500,000.00, dated as of the date hereof, made by
Borrower and payable to the order of Metropolitan Life Insurance Company (the
"Class A Note") and that certain Class B Promissory Note in the principal amount
of $97,500,000.00, dated as of the date hereof, made by Borrower and payable to
the order of Metropolitan Life Insurance Company (the "Class B Note") (the Class
A Note and the Class B Note being hereinafter referred to collectively as the
"Notes"), and is secured by, among other things, that certain Leasehold
Mortgage, Security Agreement And Fixture Financing Statement (hereinafter
referred to as the "Mortgage"), dated as of the date hereof, made by Borrower
in favor of MetLife and intended to recorded with the Suffolk County Registry of
Deeds in the Commonwealth of Massachusetts, and which encumbers the Property (as
such term is defined in the Mortgage). The Notes, the Mortgage and the other
documents collateral, incidental or otherwise relating to the Loan are
hereinafter referred to herein as the "Loan Documents
WHEREAS, in order to induce MetLife to enter into the Commitment and
make the Loan to Borrower, as aforesaid, Borrower agreed that Guarantor would
execute and deliver this Guaranty to MetLife; and
WHEREAS, MetLife was so willing to enter into the Commitment and make
the Loan to Borrower, as aforesaid, on the condition that Guarantor execute and
deliver this Guaranty.
-2-
<PAGE>
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Met]Life to make the Loan to
Borrower, as aforesaid, Guarantor hereby agrees for the benefit of MetLife, and
its successors and assigns, as follows:
1. Guarantor, as primary obligor and not merely as a surety, hereby
unconditionally and irrevocably guarantees to MetLife the punctual and complete
performance and observance by Copley of the Recourse Obligations (as hereinafter
defined). Guarantor further agrees to pay to MetLife the Collection Costs (as
hereinafter defined) with respect to the enforcement of any rights or remedies
against Guarantor under this Guaranty. For purposes hereof, the term "Recourse
Obligations" means the obligations of Copley arising in connection with the
matters set forth in clauses (i) to (v), inclusive, of Section 1. 17(b) of the
Mortgage and the obligations of Copley under that certain Unsecured Indemnity
Agreement of even date herewith from Copley to MetLife (the "Unsecured Indemnity
Agreement").
The intent and purpose of this document is to memorialize the
agreement of Guarantor to be primarily and personally liable on account of the
Recourse Obligations. For convenience of reference, however, the undersigned is
sometimes herein referred to as the "Guarantor" and the undertakings of the
undersigned set forth in this instrument utilize terminology applicable to
guaranties. Such usage shall not derogate from the intention of Guarantor to be
primarily and personally liable for the Recourse Obligations.
2. In the event that the Recourse Obligations are not fully and
punctually performed and observed in accordance with the terms and provisions of
the Loan Documents,
-3-
<PAGE>
then after the expiration of applicable notice and grace periods provided for in
the Loan Documents, (a) Guarantor shall cause the same to be performed and
observed; and (b) Guarantor shall pay all reasonable expenses incurred by
MetLife in enforcing its rights under this Guaranty, including, without
limitation, reasonable attorney's fees and disbursements and all other
reasonable expenses incurred by MetLife in any collection and/or other
proceeding relating thereto (all of the foregoing expenses being herein
collectively referred to as the "Collection Costs"). There shall be no
requirement that MetLife, in order to enforce such payment by Guarantor, first
institute suit or exhaust its remedies against Borrower or against any other
party which may be similarly liable, or to enforce any rights against any
collateral which shall have been given to secure such performance.
3. Notwithstanding any payment or payments made by Guarantor
hereunder, as long as any of the Recourse Obligations remain outstanding,
Guarantor shall not be entitled to be subrogated to any of the rights of MetLife
against Copley or any collateral security, guaranty or right of offset held by
MetLife for the performance of the Recourse Obligations by Copley, nor (as long
as any of the Recourse Obligations remain outstanding) shall Guarantor seek any
reimbursement from Copley in respect of payments made by Guarantor hereunder.
Guarantor hereby releases any rights that it may have to contribution or
indemnification from Copley as long as any of the Recourse Obligations remain
outstanding. In the event that Copley is now or shall hereafter become indebted
to Guarantor, the amount of such indebtedness and all interest thereon shall at
all times be subject and subordinate as to priority of lien, time of payment,
and in all other respects, to all sums at any time owing to MetLife hereunder or
under any of the Loan Documents, and, as long as any of the Recourse
-4-
<PAGE>
Obligations remain outstanding, Guarantor shall not assert any right of
enforcement or receive payment on account of such other indebtedness, and any
sums so received by Guarantor shall, as long as any of the Recourse Obligations
remain outstanding, be held in trust for MetLife and promptly paid over to
MetLife, provided nothing contained in this Guaranty shall impair the right of
Guarantor to receive all distributions to Members under and pursuant to the
Operating Agreement of Borrower (other than distributions, if any, representing
repayment of debt owed by Borrower to any such Member) provided that no Event of
Default has occurred and no Recourse Obligation shall be then due and owing.
4. This Guaranty is and shall be construed as a continuing, absolute,
irrevocable and unconditional guaranty of payment and performance, and not
merely a guaranty of collection, without regard to the validity or
enforceability of any of the Loan Documents or the viability of Borrower as a
duly organized and validly existing legal entity, and no set-off, counterclaim,
recoupment, reduction, or diminution of any obligation, or any defense of any
kind or nature which Borrower may have against MetLife or any other party, or
which Guarantor may have against Borrower, MetLife, or any other party, in
bankruptcy or in any other instance, shall be available to, or shall be asserted
by, Guarantor against MetLife.
5. This Guaranty shall remain in full force and effect and be binding
in accordance with and to the extent of its terms upon Guarantor and its
successors and assigns, and shall inure to the benefit of MetLife and its
successors and assigns (but excluding any such successor or assign not
affiliated with MetLife which acquires title to the Property (as defined in the
Mortgage) but was not a holder of either of the Notes). Guarantor's obligations
under
-5-
<PAGE>
this Guaranty are in addition to (and in no way shall be construed to diminish)
the rights and remedies available to MetLife against Borrower under the Loan
Documents, at law and/or in equity.
If, for any reason, any payment to MetLife of any of the Recourse
Obligations to which this Guaranty is applicable is required to be refunded to
Copley or paid over to any other party, including, without limitation, by reason
of the operation of bankruptcy laws now or hereafter enacted, Guarantor agrees
to pay to MetLife, on demand of MetLife, the amount so required to be paid over
by MetLife, and the Recourse Obligations of Guarantor shall not be treated as
having been discharged by reason of a payment to MetLife which gives rise to the
obligation of MetLife to repay the same. This Guaranty shall be treated as
having remained in full force and effect for any such repayment so required to
be made and made by MetLife, as well as any amount not theretofore paid to
MetLife on account of such Recourse Obligations of Guarantor.
At any public or private sale of any security or collateral for the
Recourse Obligations or any part thereof, whether by foreclosure or otherwise,
MetLife may, in its discretion, purchase all or any part of such security or
collateral so sold or offered for sale for its own account and may apply against
the amount bid therefor the balance due it pursuant to Loan Documents without
prejudice to MetLife's remedies hereunder against Guarantor for deficiencies.
6. Guarantor hereby represents and warrants that:
-6-
<PAGE>
(a) Guarantor has the power and authority to execute, deliver, and
perform its obligations under this Guaranty, and that this Guaranty constitutes
the legal, valid, and binding obligation of Guarantor, enforceable against
Guarantor in accordance with its terms;
(b) the execution, delivery, and performance by Guarantor of this
Guaranty does not and will not: (i) violate or conflict with any law, rule, or
regulation, or any order, writ, injunction, or decree of any court, arbitrator
or governmental authority or agency to which Guarantor is subject; (ii) conflict
with, result in a breach of, constitute a default under, or result in the
imposition of any lien upon any assets of Guarantor pursuant to the provisions
of, any indenture, mortgage, deed of trust, security agreement or any other
instrument or agreement to which Guarantor or its respective assets are bound;
and (iii) result in a breach or violation of the terms and provisions of the
operating agreement pursuant to which Borrower was formed, or any amendments
thereto, or any other agreement to which Guarantor is a party;
(c) no consent of any other person, and no consent, license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority, bureau or
agency, is required in connection with the execution, delivery, performance,
validity or enforceability of this Guaranty;
(d) Guarantor has, independently and without reliance upon MetLife,
and based upon such documents and information as Guarantor has deemed
appropriate, made its own analysis and decision to enter into this Guaranty.
Furthermore, Guarantor has adequate means to obtain from Copley, on a continuing
basis, information concerning the financial
-7-
<PAGE>
condition and assets of Copley, and Guarantor is not relying upon MetLife to
provide (and MetLife shall have no duty to provide) any such information to
Guarantor, either now or in the future; and
(e) no litigation, arbitration, investigation or administrative
proceeding of or before any court, arbitrator or governmental authority, bureau
or agency is currently pending or, to the knowledge of Guarantor, threatened (i)
with respect to this Guaranty or any of the transactions contemplated by this
Guaranty, or (ii) against or affecting Guarantor, or any of its property or
assets, which, if adversely determined, would have a material adverse effect on
the business, operations, assets or condition, financial or otherwise, of
Guarantor.
7. Except as otherwise specifically provided or specifically permitted
in the Mortgage, Guarantor covenants and agrees, as long as the Loan, or any
part thereof, is outstanding, that Guarantor will at all times remain a member
of Borrower, as and to the same extent required by the applicable terms,
provisions, covenants and conditions of the Loan Documents.
8. JMB has delivered to Lender an audited statement of its financial
condition as of December 31, 1996 and OPCC has delivered to Lender a certified
unaudited statement of its financial condition as of March 31, 1997 ("Financial
Statement"). By no later than April 30 for OPCC and June 30 for JMB, of each
year during the term of the Loan, Guarantor shall deliver to MetLife a current
Financial Statement for Guarantor reporting its financial condition as of the
close of the previous calendar year. All required Financial Statements shall. be
prepared by a certified public accountant (or firm of certified public
-8-
<PAGE>
accountants) reasonably acceptable to MetLife and shall be certified by
Guarantor to be a true, correct and complete statement of its financial position
and net worth. Such Financial Statement shall be prepared in accordance with
generally accepted accounting principles.
9. The obligations of Guarantor under this Guaranty are independent of
the Loan (and a separate action or actions may be brought and prosecuted against
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against Borrower or whether Borrower has been joined in any such action
or actions), and the liability of Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Loan
Documents;
(b) any change in the time, manner or place of payment of the Loan, or
any other change or modification in or of any terms, provisions, covenants or
conditions of any or all of the Loan Documents, including, without limitation,
any increase in the Loan resulting from the extension of additional credit to
Borrower, the granting of any indulgence to Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any collateral,
or any taking, release or amendment or waiver of or consent to departure from
any other guaranty for all or any of the Loan, or, except as otherwise
specifically set forth herein, any sale or transfer by Borrower of the Property,
or any of the other collateral encumbered by any of the Loan Documents (without
implying that MetLife has consented or will consent to any such sale or
transfer);
-9-
<PAGE>
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Loan, or any manner of sale or other disposition of any
collateral for all or any of the Loan or any other assets of Borrower;
(e) any change, restructuring or termination of the existence of
Borrower;
(f) the relief, modification, impairment, change or limitation of the
Recourse Obligations by operation of law or otherwise (including, without
limitation, in connection with proceedings under the bankruptcy laws now or
hereafter enacted), Guarantor hereby waiving all suretyship defenses and other
defenses in the nature thereof; or
(g) any other circumstance which might otherwise constitute a defense
available to, or discharge of, Borrower.
10. Guarantor hereby waives notice of any default under the Loan
Documents (except that MetLife will simultaneously provide to Guarantor a copy
of any notice MetLife provides to Copley with respect to the obligations covered
by this Guaranty, provided the failure to deliver such notice shall not affect
the obligations and liability of Guarantor to MetLife under this Guaranty),
demand of payment, notice of acceptance of this Guaranty, presentment, notice of
protest, notice of dishonor, notice of the incurring by Borrower of additional
indebtedness, and all other notices and demands with respect to the Loan and
this Guaranty by MetLife and/or Borrower, and all suretyship defenses or other
defenses in the nature thereof.
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<PAGE>
11. No failure to exercise, and no delay on the part of MetLife in
exercising, any right, power or privilege under this Guaranty shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege by MetLife preclude any other or further exercise thereof, or the
exercise of any other power or right. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law.
12. All notices, requests and demands and other communications
hereunder shall be deemed to have been sufficiently given or served upon receipt
(i) when presented personally; (ii) when delivered to an overnight courier
service with guaranteed next day delivery; or (iii) when deposited in the mail
by certified mail, return receipt requested, in each such case when addressed to
OPCC at 1 15 Perimeter Center Place, Suite 940, Atlanta, Georgia 30346,
Attention: Legal, with a copy simultaneously sent to Hutchins, Wheeler &
Dittmar, 101 Federal Street, Boston, Massachusetts 02110, Attention: John C.
Thomson, Esq., when addressed to JMB at 900 North Michigan Avenue, Chicago,
Illinois 60611-1525, Attention: General Counsel, with a copy to Pircher, Nichols
& Meeks, 1999 Avenue of the Stars, Los Angeles, California 90067, Attention:
Real Estate Notices (SCS), and when addressed to MetLife at 200 Park Avenue,
12th Floor, New York, New York 10166, Attention: Senior Vice-President, Real
Estate Investments, with a copy simultaneously sent to MetLife at One Madison
Avenue, New York, New York 10010, Attention: Vice-President & Investment
Counsel, Real Estate Investments, and shall be deemed to have been received upon
the earlier of actual receipt thereof or the date indicated on the return
receipt as having been
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<PAGE>
received. Either MetLife or Guarantor may change their respective addresses for
notices hereunder by written notice to the other party.
13. Guarantor recognizes that MetLife relied upon the delivery of this
Guaranty in entering into the Commitment, and is relying upon this Guaranty and
the undertakings of Guarantor hereunder in making the Loan to Borrower, as
aforesaid, and further recognizes that the execution and delivery of this
Guaranty is a material inducement to MetLife in so making the Loan to Borrower,
and that the making of the Loan to Borrower, as aforesaid, represents a
significant benefit to both Guarantor and Borrower. Guarantor hereby
acknowledges that there are no conditions or restrictions to the full
effectiveness of this Guaranty.
14. This Guaranty shall be governed by and be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.
Guarantor hereby irrevocably: (i) submits to the jurisdiction of the Trial
Courts, Superior Court Division, of the Commonwealth of Massachusetts, or any of
the U.S. Federal Courts having jurisdiction in the Commonwealth in any suit,
action or proceeding brought against Guarantor under or in connection with this
Guaranty; (ii) waives any objection that it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in any such court or that
any such court is an inconvenient forum; and (iii) waives all right to a trial
by jury in any action, proceeding, or counterclaim (whether based upon contract,
tort or otherwise) arising out of or relating to this Guaranty, the transactions
contemplated hereby, or the actions of MetLife in the negotiation,
administration, or enforcement hereof.
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<PAGE>
15. Subject to the provisions of Sections 5, 20 and 21 hereof, this
Guaranty shall remain in full force and effect until the full and complete
satisfaction and/or the earlier permitted prepayment in full of the Loan by
Borrower (or Guarantor). Guarantor further waives notice of any future amendment
of the Loan Documents, whether by formal document or otherwise.
16. Any provision of this Guaranty which is deemed to be prohibited or
unenforceable in any one jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any one jurisdiction shall not invalidate or render
unenforceable in any other jurisdiction such provision or any other provision of
this Guaranty.
17. This Guaranty represents the entire understanding of Guarantor and
MetLife with respect to the subject matter hereof and no provision of this
Guaranty shall be waived, amended or supplemented except by a written instrument
executed by Guarantor and MetLife.
18. This Guaranty shall not inure to the benefit of any third parties
other than MetLife (and its successors and assigns), and no such third parties
shall be deemed to be beneficiaries hereof nor be entitled to claim, under any
circumstances whatsoever, any benefit from this Guaranty.
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<PAGE>
19. The obligations of each party executing this Guaranty shall be
joint and several. Whenever the term Guarantor is used herein it shall be deemed
to refer to each Guarantor individually, as well as all such Guarantors
collectively.
20. Notwithstanding anything to the contrary contained herein, in the
event that (a) JMB transfers its interest in Copley to Urban Shopping Centers,
L.P., an Illinois limited partnership, in accordance with the provisions of the
Loan Documents, and (b) USC delivers to MetLife a guaranty in form, scope and
substance substantially similar to this Guaranty, MetLife shall simultaneously
in connection with such transfer release JMB of its liability under this
Guaranty1 with respect to matters arising from and after the date of such
delivery.
21. Notwithstanding anything to the contrary contained herein, in the
event that (a) Copley transfers the Property in accordance with the provisions
of Section 3.03(d) of the Mortgage and (b) substitute guarantors reasonably
acceptable to MetLife deliver to MetLife a guaranty in form, scope and substance
substantially similar to this Guaranty and otherwise assume all of the
obligations of Guarantors under this guaranty in a manner reasonably
satisfactory to MetLife, MetLife shall simultaneously in connection with such
transfer release Guarantor of its liability under this Guaranty, with respect to
matters arising from and after the date of such delivery.
22. Notwithstanding anything to the contrary contained in this
Guaranty, but without in any manner releasing, impairing or otherwise affecting
this Guaranty or the liability of Guarantor hereunder, or the validity hereof,
no shareholder, officer, director, employee,
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<PAGE>
agent, or representative of Guarantor shall have any personal liability under or
in connection with this Guaranty.
23. This Guaranty may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but
all of which together shall constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written, under seal.
GUARANTOR:
OVERSEAS PARTNERS CAPITAL
CORP., a Delaware corporation
By: /s/ Bruce M. Barone
---------------------
Name: Bruce M. Barone
---------------
Title: President and CEO
-----------------
JMB REALTY CORPORATION
a Delaware corporation
By:
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written, under seal.
GUARANTOR:
OVERSEAS PARTNERS CAPITAL
CORP., a Delaware corporation
By:
Name:
Title:
JMB REALTY CORPORATION
a Delaware corporation
By: /s/ H. Rigel Barber
-------------------
Name: H. Rigel Barber
---------------
Title: VP and CEO
----------
<PAGE>
Exhibit 10 (yyy)
<PAGE>
7/30/97
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
COPLEY PLACE ASSOCIATES, LLC
THIS AGREEMENT is made and entered into as of the 30th day of July, 1997,
by and between OVERSEAS PAPTNERS CAPITAL CORP., a Delaware corporation
("Overseas'), JMB REALTY CORPORATION, a Delaware corporation ("JMB"), and COPLEY
PLACE CORP., INC., a Delaware Corporation ("Copley"),
RECITALS
WHEREAS, COPLEY PLACE ASSOCIATES, LLC (the "Company"), was organized as a
limited liability Company under the laws of the State of Delaware on January 23,
1997, pursuant to agreement (the "Original Company Agreement') by and among JMB,
CARLYLE REAL ESTATE, LIMITED PARTNERSHIP XIII, an Illinois limited partnership
("Carlyle"), and URBAN INVESTMENT AND DEVELOPMENT CO., an Illinois general
partnership ("Urban").
WHEREAS, the Original Company Agreement was amended and restated by the
parties thereto in its entirety pursuant to an Amended and Restated Limited
Liability Company Agreement, dated as of January 23, 1997 (the Original Company
Agreement, as so amended and restated prior to the date hereof, being
hereinafter referred to as the "Existing Company Agreement');
WHEREAS, immediately prior to the date hereof, Overseas held 66 2/3% of the
interest in the Company, with JMB retaining 33 1/3% of the interest in the
Company;
WHEREAS, contemporaneously with the execution of this Agreement, Overseas
has transferred one percent (1%) of the interest in the Company held by it to
Copley Place Corp., Inc., a Delaware corporation ("Copley"), pursuant to the
provisions of Article VI of the Existing Company Agreement-, and
WHEREAS, JMB, Overseas and Copley now desire to amend, restate and
supersede the Existing Company Agreement in its entirety in order (i) to
formally add Copley as a Member, (ii) to designate Copley as the "Independent
Member hereunder and to provide for the powers and duties of such Independent
Member, (iii) to revise, or add to, the provisions hereof in order to provide
for certain additional restrictions on actions or powers of the Company or the
Members, to provide for additional procedures or requirements relating to
corporate or organizational separateness, and related matters, and (iv) to
reflect the undertaking by the Company on the date hereof of a refinancing of
the Existing Loan, as more particularly described below.
<PAGE>
IN VIEW OF THE FOREGOING FACTS, and in consideration of the respective
undertakings of the parties hereto, JMB, Overseas and Copley, as the sole
members in the Company, hereby amend and restate the Existing Company Agreement
of the Company in its entirety as follows:
ARTICLE 1 CONTINUATION OF COMPANY: BASIC INFORMATION
---------------------------------------------------
Section 1.1. Continuation. This Amended and Restated Limited
------------
Liability Company Agreement (sometimes referred to herein as this "Agreement")
amends, restates and supersedes the Original Company Agreement in its entirety.
As of the date of this Agreement, the sole and only rights of the "Members" (as
defined below) as members in the Company shall be as set forth in this
Agreement. The Company shall continue to exist and operate without interruption
as a limited liability company under the laws of the State of Delaware in
accordance with the Delaware Limited Liability Company Act (6 Del. (S) 1 8-1 01
et seq., as amended from time to time (the "Act")).
- -- ---
Section 1.2. Name-. The business of the Company shall continue to be
-----
conducted under the name of "Copley Place Associates, LLC,"' or such other name
as the Managing Member may hereafter determine in compliance with applicable
law; provided that, any such other name shall not refer to or incorporate the
name of any business entity affiliated with any Member (e.g., the name shall not
include the word "Overseas").
Section 1.3. Term. The Company shall continue in full force and
----
effect until terminated pursuant to Section 8.1 hereof. As used herein, "Company
Year" means (a) the remaining portion of the current calendar year (i.e., the
calendar year in which the date hereof occurs), (b) each full calendar year
prior to the termination of this Company pursuant to Section 8.1 hereof, and (c)
that portion of the calendar year in which this Company terminates pursuant to
Section 8.1 hereof
Section 1.4. Character of Business. The character of the business of
---------------------
the Company is limited solely to (i) owning, developing, maintaining, marketing,
selling and otherwise using the "Business Property" (as hereinafter defined) for
profit, (ii) borrowing the principal amount IP of $195,000,000 (the "Loan") from
Metropolitan Life Insurance Company ("the "Lender") in order to refinance the
"Existing Loans (as hereinafter defined), which Loan is to be secured by a
Leasehold Mortgage, Security Agreement and Fixture Financing Statement, dated
the date hereof (the "Mortgage"), from the Company and Urban in favor of the
Lender creating, Inter alia mortgage lien and security interest in the Company's
interest in the Business Property, (iii) refinancing the Business Property in
connection with the permitted repayment of the Loan and the discharge of the
Mortgage at a future date, and (iv) engaging in any lawful acts or activities
and exercising any powers permitted to limited liability companies under the
Act, provided that any such act, activity or power is related or incidental to
and necessary, appropriate or convenient for the accomplishment of the foregoing
purposes. All or any portion of the "Company Property" (as hereinafter defined)
may be owned directly by the
2
<PAGE>
Company or through one or more wholly-owned entities acting as nominee (each
such entity being referred to hereinafter as a "Nominee") on behalf of the
Company.
Section 1.5. Names and Addresses of Members. The names and addresses of the
------------------------------
Members are as follows:
Overseas
--------
Overseas Partners Capital Corp.
115 Perimeter Center Place, Suite 940
Atlanta, Georgia 30346
JMB
---
JMB Realty Corporation
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Copley
------
[address to be supplied]
Section 1.6 The Independent Member. So long as any obligations of the
------------------
Company under the Mortgage and the Loan are outstanding, the Company shall at
all times include at least one (1) Independent Member. Initially, the
Independent Member shall be Copley. If at any time Copley withdraws or
relinquishes its status as the Independent Member hereunder (notwithstanding the
prohibition on such action as set forth in Copley's Certificate of
Incorporation), the remaining Members shall immediately appoint and admit a new
entity to act as such Independent Member, provided that (i) the organizational
structure of such entity shall be substantially similar to that of Copley and
satisfactory to Lender and to any Rating Agency (as defined in the Mortgage), if
any, then maintaining a rating in connection with any securitization or
participation of interests in the Loan; and (ii) the Company shall deliver an
acceptable non-consolidation opinion to the Lender and to any applicable Rating
Agency concerning, as applicable, the Company, the new Independent Member and
its owners. When voting on matters subject to the vote of all the Members,
including those matters specified in Section 5. I.E hereof, and notwithstanding
that the Company is not then insolvent, the Independent Member shall take into
account the interests of the creditors of the Company as well as the interests
of the Members .
Section 1.7. Principal Place of Business: Registered Office-and-Agent. The
--------------------------------------------------------
principal place of business of the Company shall be located at 115 Perimeter
Center Place, Suite 940, Atlanta, Georgia 30346, or such other place in the
United States as the Managing
3
<PAGE>
Member may designate. The Company may maintain other offices at such other
locations in the United States as the Members shall determine from time to time.
The registered office and registered agent for service of process of the Company
shall be CT Corporation System, 1201 Peachtree Street, N.B., Atlanta, Georgia
30361, or such other place as the Managing Member may from time to time
designate.
Section 1.8. Company Filings,
---------------
A. The Managing Member shall cause any filing to be made, from time to
time, as required by applicable law, whenever there is any change in the
Managing Member, the Company's name, registered office, agent for service of
process, or any existing filing required under the Act or in any jurisdiction in
which the Company engages in business, or an amendment under applicable law.
B. Upon the dissolution of the Company, the Managing Member shall promptly
execute and cause to be filed any certificate of cancellation required by the
Act and any other filings required under applicable laws.
C. The Managing Member shall, from time to time, execute and deliver any
assumed or fictitious or business name statement or certificate or any similar
document required by applicable law to be filed in connection with the continued
operation of the Company.
D. Each Member shall promptly deliver to the other Member copies of all
filings made on behalf of the Company in accordance with this section
Section 1.9. Certain Definitions. As used herein, the following terms
-------------------
have the following meanings:
"Affiliate" means, as to any Member (-Including Urban Shopping Centers, as
defined below, if it becomes a Member), any parent entity of the Member
(provided such parent entity owns and so long as it continues to own at least
eighty percent [80%] of the Member) or any entity at least eighty percent (80%)
of the ownership interests in which are held and continue to be held directly or
indirectly by the Member or such parent, but shall not include any one or more
individuals, except that "Affiliate" shall include (as to JMB only) (i) Urban
Shopping Centers, L.P., Urban Shopping Centers, Inc. or any entity into which
either of the same shall be merged (individually and collectively, "Urban
Shopping Centers"), or (ii) any entity at least eighty percent (80%) of the
ownership interests in which are held directly or indirectly and continue to be
held by the shareholders of JMB,
"AGREEMENT," or the "COMPANY AGREEMENT," means this Second Amended and Restated
Limited Liability Company Agreement, as amended, modified or supplemented from
time to time.
4
<PAGE>
"BANKRUPTCY" of a Member shall be deemed to have occurred upon the commencement
of a case with respect to such Member Under Title 11 of the United States Code
(as now constituted or hereafter amended) or under any other applicable federal
or state bankruptcy law or other similar law, or if any courts enter a decree or
order appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Member or of any substantial portion of such
Member's property (but only if, in the case of an . involuntary proceeding or
appointment, such proceeding or appointment is not dismissed or discharged
within 180 days after its commencement).
"BUDGET" is defined in Section 5.12,
"BUSINESS PROPERTY" means, collectively, (i) the Central Area, and (ii) the
Dartmouth Garage.
"CAPITAL CONTRIBUTION" means, with respect to any Member as of any time of
determination, the sum of (i) the amount of money that such Member has
contributed to the Company, (ii) the fair market value, as agreed by the
Members, of any property that such Member has contributed, or is deemed to have
contributed pursuant to Section 708 of the Code, to the Company (net of any
liabilities that the Company has assumed or taken subject to, under Section 752
of the Code of 1986 (as amended) (the "Code"), in connection with acquiring such
property from such Member), and (iii) the amount of any Company liabilities that
such Member has assured, within the meaning of Section 1. 7 04- 1 (b) (2)(iv')
(c) of the Income Tax Regulations, other than in connection with receiving one
or more distributions from the Company. As of the date hereof, the amounts of
the Member's respective Capital Contributions to the Company have been agreed to
by the Members and are set forth on Exhibit "A" attached here to.
"CASH EXPENDITURES" for the applicable period means cash expenditures made by
the Company or which the Company is obligated to make or which any lender
requires to be escrowed or impounded for or during such period in the operation
of or in connection with the "Company Property," including, without limitation,
payroll, business taxes and real and personal property taxes and assessments,
insurance premiums, leasing commissions and fees, tenant improvements and other
capital costs, all expenditures made or required to be made by the Manager on
behalf of the Company under the Management Agreement or by the Purchased
Services Provider under the Purchased Services Agreement, and all management
fees and expenses, but excluding Debt Service Payments and expenditures to the
extent the same are paid for with Reserve Additions., financing proceeds or sale
proceeds-
"CASH INCOME" for the applicable period means the gross cash revenues and funds
received by the Company in such period or applicable to such period (prepaid
rents. prepaid payments and security deposits and any other Items received in
one period and applicable to a later period to be included in Cash Income only
as earned, applied or forfeited), other than funds received as loans from the
Members, Capital Contributions (other than the initial Capital
5
<PAGE>
Contributions as set forth in Exhibit "A" -hereto) or financing proceeds or sale
proceeds. In addition, any distribution to the Members from the Company's
reserves shall constitute Cash Income for the period in which such distribution
is made.
"CENTRAL AREA" means that certain land described in Exhibit "B," hereunto
annexed and made a part hereof, and the improvements thereon, and all easements
and appurtenances thereto (the Company's interest in said land being a
subleasehold estate pursuant to the Central Area Sublease, which sublease is
subject to the Master Lease).
"CENTRAL AREA SUBLEASE" means that certain sublease with respect to the Business
Property, captioned "Sublease," dated as of August 31, 1992, by and between
Urban and UIDC of Massachusetts, Inc., a Delaware corporation ("UIDC-MA"), as
predecessor-in-interest to Company Predecessor, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY PERCENTAGES" mean the following respective percentages for each of the
Members (as the same may be adjusted by the express provisions elsewhere in this
Agreement), which reflect the Capital Contributions made by the Members to the
Company on or prior to the date hereof-,
Company
Member Percentage
------ ----------
Overseas 65-2/3%
JMB 33-1/3%
Copley 1%
The making of additional Capital Contributions (including, without limitation,
any "Discretionary Capital Contribution" or any Capital Contribution represented
by a "Preferred Member Interest", as such terms are respectively defined below)
by the Members as provided herein shall not affect the Members' respective
Company Percentages.
"COMPANY PREDECESSOR" means Copley Place Associates, an Illinois general
partnership, as predecessor-in-interest to the Company.
"COMPANY PROPERTY" means all property, of whatever kind or nature, owned by the
Company from time to time, including, without limitation, the Business Property.
"Dartmouth Garage" means that certain real property end improvements, and
easements and appurtenances thereto, commonly known as the "Dartmouth Street
Garage" located at 128 Dartmouth Street in Boston, Massachusetts (the Company's
interest in such land being a leasehold estate pursuant to the Dartmouth Garage
Lease).
6
<PAGE>
"DARTMOUTH GARAGE LEASE" means that certain lease agreement, captioned "LEASE
BOSTON REDEVELOPMENT AUTHORLTY TO URBAN INVESTMENT AND DEVELOPMENT COMPANY OF
PARCELS 11A AND B SOUTH END URBAN RENEWAL AREA BOSTON, MASSACHUSETTS," dated
March 7,1986, by and between Boston Redevelopment Authority, a public body
politic and corporate, organized under the laws of the Commonwealth of
Massachusetts, and Urban Investment and Development Co-, a Delaware corporation,
as amended by amendment, captioned "AMENDMENT TO LEASE BOSTON REDEVELOPMENT
AUTHORITY TO URBAN INVESTMENT AND DEVELOPMENT COMPANY OF PARCELS 11A AND B SOUTH
END URBAN RENEWAL AREA BOSTON, MASSACHUSETTS," dated December 30,1986, with
respect to the Company's leasing of the Dartmouth Garage.
"DEBT SERVICE PAYMENTS" for the applicable period means all installments and
payments of principal and interest and other sums and amounts paid or payable
for or during such period on or in connection with any secured or unsecured
indebtedness of the Company-
"DIRECT LEASE AGREEMENT" means that certain agreement, captioned
"NONDISTURBANCE, RECOGNITION AND DIRECT LEASING AGREEMENT," dated as of August
31,1982, by and among the Massachusetts Turnpike Authority ("MTA"), Urban
Investment and Development Co,, a Delaware corporation, and UIDC-MA, as recorded
in the Suffolk County Registry in Book 10056, Page 242.
"DISCRETIONARY CAPITAL CONTRIBUTION" is as defined in Section 3.4.
"DISTRIBUTABLE CASH" means, collectively, Net Cash Receipts, Net Financing
Proceeds and Net Sales Proceeds,
"EQUITY PAYMENT AGREEMENT" means that certain agreement, captioned "EQUITY
PAYMENT AGREEMENT," dated as of March 1, 1992, by and among Company predecessor,
Copley Place Associates Nominee Corporation, a Delaware corporation, Copley
Funding Corporation, a Delaware corporation, Copley Financing Corporation, a
Delaware corporation, and Aetna Casualty and Surety Company, a Connecticut
corporation, as predecessors-in-interest to Existing Lender, which agreement is
secured by that certain non-recourse second mortgage, dated March 1, 1992.
"EXISTING LENDER" means Travelers Insurance Company, a Connecticut corporation,
as assignee of the interests of Copley Funding Corporation, a Delaware
corporation, Copley Financing Corporation, a Delaware corporation, and Aetna
Casualty and Surety Company, a Connecticut corporation, in and to the "Existing
Loan" (as defined below).
"EXISTING LOAN" means that certain loan encumbering the Central Area in the
original principal amount of $230,000,000 which is held by Existing Lender.
7
<PAGE>
"EXISTING LOAN DOCUMENTS" means all documents, instruments and agreements
evidencing, securing or governing the existing Loan, including, without
limitations the Equity Payment Agreement.
"INCOME TAX REGULATIONS" means those regulations covered under the Code, as the
same may be amended from time to time.
"INDEPENDENT DIRECTOR" means an individual who is not at the time of initial
appointment and has not been at any time during the preceding five (5) years (a)
a stockholder, director, officer, employee, partner, attorney or counsel of the
Independent Member, the Company or any affiliate of either of them; (b) a
customer, supplier or other person who -derives more than 10% of its purchases
or revenues from its activities with the Independent Member, the Company or any
affiliate of either of them; (c) a person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other
person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, partners customer, supplier or other person. (As
used herein, the term "control" means the herein, the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a person or entity, whether through ownership of
voting securities, by contract or otherwise.)
"INDEPENDENT MEMBER" means a Delaware corporation whose sole permitted business
is to serve as a Member of the Company, which is a voting Member of the Company
and which is required under its Certificate of Incorporation at all times to
have at least one (1) Independent Director in office and voting whose
affirmative vote is required to authorize such corporation to vote in favor of
any of the matters specified in this Agreement which requires the affirmative
vote of all of the Members of the Company or the entire board of directors of
such corporation.
"LOAN" has the meaning set forth in the Recitals hereto.
"LENDER" has the meaning set forth in the Recitals hereto.
"MANAGEMENT AGREEMENT" means that certain management agreement dated as of the
date hereof, by and between Overseas Management, Inc. ("Manager"), as manager,
and Company, as owner, pursuant to which Manager is engaged to provide certain
management and leasing services to the Business Property.
"MANAGING MEMBER" means Overseas, and its permitted successors and assigns, as
managing member in the Company.
"MASTER LEASE" means that certain Amended and Restated Lease, dated as of
January 31, 1980, by and among Urban (or its predecessor--in-interest) and MTA
as amended.
8
<PAGE>
"MEMBERS" means the Managing Member, the Non-Managing Member and (unless
otherwise specified herein) the Independent Member,
"MORTGAGE" has the meaning set forth in Section 1,4 hereof
"NET CASH RECEIPTS" for the applicable period means the, amount, if any, by
which (x) the Cash Income for such period exceeds (y) the sum of the Cash
Expenditures for such period, the Debt Service Payments for such period, and the
Reserve Additions for such period.
"NET FINANCING PROCEEDS" and "NET SALE PROCEEDS" mean, respectively, the net
proceeds from (1) any financing or refinancing of the Company Property or any
part thereof, including without limitation the Loan, and (2) any sale,
disposition, taking or loss (including the proceeds from any eminent domain
proceeding or conveyance in lieu thereof or from casualty insurance [other Than
rental income insurance] or title insurance) of the Company Property or any part
thereof. In the computation of Net Financing Proceeds and Net Sale Proceeds
there shall be deducted the payment of all costs and other expenses related
thereto (including, but not limited to, brokerage costs, prepayment penalties,
attorneys' and consultants' fees and closing costs) approved by the Managing
Member and the satisfaction of any debt being refinanced or discharged and any
other debts or liabilities of the Company for which the Managing Member decides
to use the same and the setting aside of any reserves therefrom reasonably
deemed proper by the Managing Member.
"NON-MANAGING MEMBER" means JMB, `and its permitted successors and assigns, as a
nonmanaging member in the Company.
"PREFERRED MEMBER INTEREST" has the meaning set forth in Section 3.7 hereof.
"PURCHASED SERVICES AGREEMENT" means that certain agreement, captioned
"Agreement for Purchase of Consulting and Other Services", dated as of the date
hereof, by and between Urban Retail Properties CO, a Delaware corporation
("Purchased Services Provider"), and Manager, pursuant to which Purchased
Services Provider is engaged to provide certain management, consultation and
advisory services to Manager and joined in by the Company for certain limited
purposes. The Purchased Services Agreement is subject and subordinate to the
Management Agreement.
"PRIOR MANAGEMENT AGREEMENT" means that certain management agreement dated
September 1, 1983, by and between Purchased Services Provider and Company
Predecessor pursuant to which Purchased Services Provider was, for a period
prior to the date hereof, engaged to provide certain management and leasing
services to the Business Property. The Prior Management Agreement has
heretofore been, or shall concurrently herewith be, terminated.
9
<PAGE>
"RESERVE ADDITIONS" for the applicable period means all reserves taken by the
Company during such period or projected for the balance of the same fiscal year
in amounts determined by the Managing Member.
ARTICLE III CERTAIN INCORPORATED MATTERS.
------------------------------------------
Section 2. 1. Tax and Accounting. Each and all of the provisions of
------------------
Exhibit "C" are incorporated herein and shall constitute part of this Agreement.
Exhibit "C" provides for, among other matters, the maintenance of capital
accounts, the allocation of profits and losses, and the maintenance of books and
records.
Section 2.2. Existing Loan, Each and all of the provisions of Exhibit
-------------
"E," are incorporated herein and shall constitute part of this Agreement.
Exhibit "E" imposes certain obligations on the Non-Managing Member, and grants
certain rights to and imposes certain obligations upon Managing Member, in
connection with the Existing Loan for so long as the same shall be outstanding.
ARTICLE III CONTRIBUTIONS AND LOANS BY MEMBERS
----------------------------------------------
Section 3. 1. Contributions By Members, The Members acknowledge and agree
------------------------
that certain Capital Contributions have heretofore been made, or are being made
concurrently herewith, by the Members or their predecessors-in-interest, as set
forth in Exhibit "A' attached hereto. Except as expressly provided in this
Article 111, no additional capital contributions shall be required under this
Agreement.
Section 3.2. Recoupment for Capital Contributions - No Member shall receive
------------------------------------
any recoupment or payment on account of or with respect to the Capital
Contributions made by it (or by its predecessors-in-interest) except as and to
the extent expressly provided in this Agreement.
Section 3.3. Member Loans Except as otherwise expressly provided under
------------
this Agreement (including the provisions of Exhibit "E" attached hereto), any
Member making a loan to the Company shall be entitled to interest thereon at the
"APPLICABLE RATE," and the same, together with interest as aforesaid, shall be
repaid before any distribution shall be made under Article IV hereof However, no
such loan to the Company shall be made without the prior written consent of the
Managing Member. `The "APPLICABLE RATE" shall be the lesser of (A) two
percentage points over the prime rate announced from time to time by The First
National Bank of Chicago during the period such loans shall be outstanding,
and (B) the maximum interest that may be charged by such Member on such loans
under any applicable usury law. Notwithstanding any other provision of this
Section 3.3, for so long as the obligations of the Company under the Mortgage
and the Loan remain outstanding, no Member shall make any loan to the Company-
The Independent Member shall not be entitled or required to make any loan
hereunder at any time.
10
<PAGE>
Section 3.4. Managing Member's Right to Require Addition Capital
---------------------------------------------------
Contribution for Capital Expenditures. Notwithstanding Section 3.1 above, the
- -------------------------------------
Managing Member may from time to time require the Members (subject to the -right
of a Member to make a "Non Contribution Election" [as defined below]) to make
additional Capital Contributions for the purpose of making capital expenditures
deemed by the Managing' Member to be in the best interest of the Company or the
Company Property. No such capital expenditure may be made which constitutes a
breach of the Managing Member's fiduciary duties to the Non-Managing Member or
which causes "Economic Injury" (as defined in Section 5. I)- In addition, if the
proposed capital expenditure or related series of capital expenditures would
exceed $5,000,000, then such capital expenditure may be disputed by the Non-
Managing Member Pursuant to the arbitration provisions of Sections 5,1.B(l) and
7.7 hereof
The Managing Member shall give the Non-Managing Member and the Independent
Member thirty (30) days' notice of any required Capital Contribution under this
Section 3.4, and (subject to the right of a Member to make a "Non-Contribution
Election" as defined below) the Members shall contribute the required additional
capital in proportion to their respective Company Percentages.
Any Member (a "Non-Contributing Member") may elect not to make such capital
contribution as provided in this Section 3.4, in which case the other Member
(the "Contributing Member") shall either (a) contribute I 00% (but not less than
1 00%) of the total capital required within thirty (30) days after the date of
the proposed contribution thereof, or (b) make no contribution whatsoever. Any
contribution made by the Contributing Member pursuant to clause (a) above shall
be hereinafter referred to as a "Discretionary Capital Contribution". A
separate "Memorandum Account" shall be maintained and reflected in the books of
the Company for each Member that makes a Discretionary Capital Contribution in
accordance with the provisions of this Section 3.4. The positive balance in any
Members' memorandum Account shall be increased from time to time as if the same
bears interest per annum equal to the sum of (i) the yield on the one-year U.S.
Treasury issue, plus (-Ii) one percent (1%) (compounded annually if not paid),
to the extent the same is not repaid from time to time. Such positive balance
in any Member's Memorandum Account is referred to hereinafter as a "positive
Memorandum Account Balance Neither Discretionary Capital Contributions nor a
Positive Memorandum Account Balance hereunder shall affect the Members'
respective Company Percentages. The Members' Positive Memorandum Account
Balances shall be repaid in accordance with Section 4.3 below.
Section 3.5. Certain Additional Capital Contributions. Section 3.6 and
-----------------------------------------
Exhibit "E" attached hereto set forth certain additional provisions governing
additional Capital Contributions and are hereby incorporated by reference into
this Article 111.
Section 3.6 Capital Contributions to Enable Refinancing. At the time of
-------------------------------------------
formation of the Company, in anticipation of the refinancing of the Company
Property in the near future, the Managing Member contributed to the Company as
an additional Capital Contribution the
11
<PAGE>
amount of $15,110,840.00 in order to retire the outstanding indebtedness under
the Existing Loan. Such amount was deposited in a bank account in the name of
the Company and is to be used only for the purpose of retiring such indebtedness
at the time of initial refinancing, and any withdrawals or transfers from such
account shall require the joint signatures of the Members. Any excess in such
account after initial refinancing shall promptly be distributed to the -Members
in accordance with their respective Company Percentages. The provisions of this
Section 3.6 shall not relieve any Members of any obligation it would otherwise
have under this Agreement to contribute the amounts needed to retire such
indebtedness at the time of the initial refinancing in excess of such
$15,110,840.00. The Capital Contribution by the Managing Member under this
Section 3.6 shall not create a Memorandum Account balance or otherwise create a
priority of distribution.
Section 3.7. Preferred Member Interest. In addition to any other Capital
-------------------------
Contribution otherwise required or permitted -under this Article III, either
Member may make an additional Capital Contribution to the Company in exchange
for a preferred member interest in the Company (the "Preferred Member Interest")
with the prior written consent of the Managing Member. The Preferred Member
Interest shall carry an accruing dividend equal to two percentage points over
the prime rate announced by the First National Bank of Chicago on the date that
the additional Capital Contribution represented by such Preferred Member
Interest is made. The Preferred Member Interest shall be entitled to
distributions in priority to any distributions which the Members would otherwise
be entitled to receive pursuant to Sections 4.1 through 4.3 hereof, until an
amount equal to the additional Capital Contribution represented by the Preferred
Member Interest, plus all accrued and unpaid dividends with respect thereto, has
been distributed to the Member holding such Preferred Member interest. The
Members shall mutually determine the manner in which Profits and Losses of the
Company shall be allocated to a Member who acquires a Preferred Member Interest,
provided, however, that such allocation shall follow the general principles for
the allocation of Profits and Losses set forth in Exhibit C attached hereto.
-------
Section 3.8. Company Records. The Company shall maintain complete and
---------------
accurate books and records regarding each Capital Contribution made hereunder,
including its proper designation pursuant to this Article Ill.
ARTICLE IV DISTRIBUTIONS.
-------------------------
Section 4.1. Distributions of Distributable Cash. Subject to the
-----------------------------------
provisions of Sections 3.4 and 4.3, Net Cash Receipts, Net Sale Proceeds and Net
Financing Proceeds (together "Distributable Cash") shall be distributed not less
frequently than once quarterly to the Members in accordance with their
respective Company Percentages.
Section 4.2. Distributions of Capital. Except as expressly provided in
------------------------
this
12
<PAGE>
Agreement or as otherwise agreed by the Members, no Member shall be entitled to
withdraw capital or to receive distributions of or against capital without the
prior written consent of, and upon the terms and conditions agreed upon by, each
other Member.
Section 4.3. Positive Memorandum Account-Balance Distributions.
--------------------------------------------------
A. One Positive Memorandum Account Balance. Subject to Section 4.3B
---------------------------------------
below, one- half (1/2) of all Distributable Cash shall first be distributed, in
preference and priority to any other distribution of Distributable Cash to a
Member having a Positive Memorandum Account Balance, until the Memorandum
Account of such Member shall no longer have a Positive Memorandum Account
Balance.
B. Two Positive Memorandum Account Balances. If at any time there shall
----------------------------------------
exist a Positive Memorandum Account Balance with respect to a Member, and the
other Member then makes a Discretionary Capital Contribution such that the
second Member would also have a Positive Memorandum Account Balance, then the
following clauses (1) through (3) shall apply, and the Positive Memorandum
Account Balances of all Members shall be deemed netted out in accordance
therewith. For purposes of the following, the Positive Memorandum Account
Balances shall be deemed netted out in accordance with clauses (1) through (3)
below immediately following creation of the Positive Memorandum Account Balance
for the second Member:
(1) First: The Positive Memorandum Account Balance of the
------
Independent Member shall be deemed to be the Positive Memorandum Account Balance
of the Managing Member, and, solely for purposes of the calculations required
under this Section 4.3.B., the Independent Member shall be deemed to have a
Positive Memorandum Account Balance of zero.
(2) Second: The Positive Memorandum Account Balance of the Managing
-------
Member (recalculated pursuant to clause (1) above) and of the Non-Managing
Member shall be multiplied by the Company Percentage of the other Member. The
product derived therefrom is hereinafter referred to as the "Memorandum Account
Product." The Member with the greater Memorandum Account Product, if any, is
hereinafter referred to as the "Remaining Memorandum Account Member," and the
Member with the lesser Memorandum Account Product, if any, is hereinafter
referred to as the "Eliminated Memorandum Account Member." The positive
difference, if any, between the Members' respective Memorandum Account Products
is hereinafter referred to as the "Remaining Memorandum Account Balance,"
(3) Third: If, at any given time the Members' respective Memorandum Account
------
Products arc equal, then each Member shall as of such time be deemed to have a
zero balance in its Memorandum Account.
13
<PAGE>
(4) Fourth: If at any given time the Members' respective Memorandum Account
-------
Products are not equal, then (a) the Remaining Memorandum Account Member shall
be deemed as of such time to have a Positive memorandum Account Balance equal to
the quotient of the remaining Memorandum Account)Balance divided by the Company
Percentage of the Eliminated Memorandum Account Member (provided, however, that
if the Eliminated Memorandum Account Member is the Managing -Member, the
Managing Member's Company Percentage shall be deemed to include the Company
Percentage of the Independent Member), and (b) the Eliminated Memorandum Account
Member shall be deemed as of such time to have, a Memorandum Account balance of
zero. Thereafter, one-half (1/2) of all Distributable Cash shall first be
distributed, in preference and priority to any other distribution of
Distributable Cash, to the Member having a Positive Memorandum Account Balance,
until the Memorandum Account of such Member shall no longer have a Positive
Memorandum Account Balance. In the event that the member having a Positive
Memorandum Account Balance pursuant to this Section 4.3B is the Managing Member,
then an amount of the Distributable Cash that is otherwise to be distributed to
the Managing Member pursuant to the prior sentence of this Section 4.3B equal to
the ratio that the Positive Memorandum Account Balance of the, Independent
Member, if any, that is deemed to be the Positive Memorandum Account Balance of
the Managing Member pursuant to clause (1) above bears to the Positive
Memorandum Account Balance, if any, of the Managing Member, shall be distributed
to the Independent Member.
Without limitation of the foregoing, the following examples illustrate
application of the formula set forth in Section 4.3B above.
Example #l
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $990,000 and 10,000, respectively, and the Non-Managing Member
immediately thereafter makes a Deficiency Contribution of $500,000. The
Independent Member's Positive Memorandum Account Balance of $10,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $1,000,000, and
the Non-Managing Member has a Positive Memorandum Account Balance of $500,000.
The Management Member's Memorandum Account Product is therefore equal to
$333,333.33 (i.e., $1,000,000 x 1/3), and the Non-Managing Member's Memorandum
Account Product is therefore also equal to $333,333.33(i.e.,$500,000 x 2/3)-
Because the Members respective Memorandum Account Products are equal, each
Member, including the Independent Member, shall be deemed to have a zero balance
in its Memorandum Account as of such time.
Example #2
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $990,000 and $ 10,000, respectively, and the Non-Managing Member
14
<PAGE>
immediately thereafter also makes a Deficiency Contribution of $1,000,000. The
Independent Member's Positive Memorandum Account Balance of $10,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $ 1,000,000, the
Non-Managing Member also has a Positive Memorandum Account Balance of $1,000,000
and the Independent Member shall be deemed to have a Positive Memorandum Account
Balance of zero. The Managing Member's Memorandum Account Product is therefore
equal to $333,333-33 $1,000,000 x 1/3), and the Non-Managing Member's Memorandum
Account Product is therefor e equal to $666,666.66 (i.e,, $1,000,000 x 2/3).
The "Remaining Memorandum Account Balance" is therefore $333,333.33 (i.e., the
positive difference between $666,666,66 and $333,333,33). The Non-Managing
Member is the Member with the greater Memorandum Account Product, and is
therefore the "Remaining Memorandum Account Member." The Managing Member is the
Member with the lesser Memorandum Account Product and is therefore the
"Eliminated Memorandum Account Member." Thus, the Non-Managing Member shall be
deemed as of such time to have a Positive Memorandum Account Balance equal to
$500,000 (i.e., the Remaining Memorandum Account Balance of $333,333.33, divided
by 2/3 [the Company Percentage of the Eliminated Memorandum Account Member)],
and the Managing Member shall be deemed to have a Memorandum Account balance of
zero.
Example #3
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $1,980,000 and $20,000, respectively, and the Non-Managing
Member immediately thereafter makes a Deficiency Contribution of $500,000. The
Independent Member's Positive Memorandum Account Balance of $20,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $2,000,000, the
Non-Managing Member has a Positive Memorandum Account Balance of $500,000 and
the Independent Member shall be deemed to have a Positive Memorandum Account
Balance of zero. The Managing Member's Memorandum Account Product is therefore
equal to $666,666.66 (i.e., $2,000,000 x 113) and the Non-Managing Members
Memorandum Account Product is therefore equal to $333,333.33 (i.e., $500,000 x
2/3). The "Remaining Memorandum Account Balance" is therefore $333,333.33
(i.e., the positive difference between $666,666.66 and $333,333,33). The
Managing Member is the Member with the greater Memorandum Account Product, and
is therefore the "Remaining Memorandum Account Member." The Non-Managing Member
is the Member with the lesser Memorandum Account Product and is therefore the
"Eliminated Memorandum Account Member." Thus, the Managing Member shall be
deemed as of such time to have a Positive Memorandum Account Balance equal to
$999,999.99 (i.e-, Remaining Memorandum Account Balance of $333,333.33, divided
by 1/3 [the Company Percentage of the Eliminated Memorandum Account Member]) and
the Non-Managing Member shall be deemed to have a Memorandum Account Balance of
zero. Upon the distribution of Distributable Cash to the Managing Member
pursuant to Section 4.3 .B., an amount equal to 1% of the amount distributable
to the Managing Member (i,e., the ratio of the Deficiency
15
<PAGE>
Contribution of the Independent Member to the Deficiency Contribution of the
Managing Member) shall be distributed to the Independent Member.
Section 4.4. Distributions Upon Preferred Member Interests. Notwithstanding
---------------------------------------------
any other provision of this Article IV, each Member holding a Preferred Member
Interest shall be entitled to a priority in all distributions to the extent and
in the manner set forth in Section 3.7 hereof
ARTICLE V P0WERS. RIGHTS AND DUTYS OF MEMBERS.
-----------------------------------------------
Section 5. 1. Authority of Members.
A. Authority -of Managing- Member. Except as specifically otherwise
------------------------------
provided in this Agreement, Managing Member shall act as the managing member,
and shall have the full and sole power and authority to manage the operations
and affairs of the Company. Neither the, Company nor the Managing Member shall
appoint managers or elect officers for the management of the Company. Except to
the extent expressly set forth in Section 5.1.E. or any other provision of this
Agreement, the Independent Member shall not participate in the management or
operation of the Company,
B. Non-Unanimous Decisions. The Managing Member shall regularly consult
-----------------------
with the Non-Managing Member on all matters other than day-to-day operations,
including specifically the matters enumerated below in this Subsection 5.1.B
("Non-Unanimous Decisions"), but no prior approval by the Non-Managing Member of
the Managing Member's proposed action with respect to any such matter shall be
required, except in the case of a matter hereinafter designated as an
"Arbitration Non-Unanimous Decision." However, in the event of a dispute as to
any Arbitration Non-Unanimous Decision, the sole remedy of the parties shall be
to invoke the arbitration provisions of Section 7.7 of this Agreement, and
provided the Non-Managing Member has received a written statement of the
proposed action and the Non-Managing Member fails to invoke arbitration as
provided in Section 7.7 hereof, the Managing Member may proceed without the
agreement of the Non-Managing Member. Except with the consent of the Non-
Managing Member in each instance, the Managing Member shall not exercise its
authority under this Subsection 5.1.B so as to cause Economic Injury to the Non-
Managing Member or breach the Managing Member's fiduciary duties.
(1) Any capital expenditure or any related series of capital expenditures,
or act which would commit the Company to make any capital expenditure (or any
related series of capital expenditures), of $5,000,000 or more (an
"Extraordinary Capital Expenditure"), regardless of whether or not the same
shall be included in an approved annual Budget Any Extraordinary Capital
Expenditure shall be funded from contributions by the Members in accordance
with, and subject to the provisions of, Section 3.4 above. The making of an
Extraordinary Capital Expenditure shall be an Arbitration Non-Unanimous
Decision.
16
<PAGE>
(2) The acquisition or any additional real property and the terms of such
acquisition.
(3) The engagement and retention of the leasing agents or other equivalent
level personnel,
(4) The termination of the Purchased Services Agreement other than in
accordance with the terms of the Purchased Services Agreement.
(5) The design of any construction at the Business Property, including
product types, architectural and engineering drawings, and plans and
specifications.
(6) Any concessions by the Company or restrictions on the Company or the
Business Property in connection with obtaining zoning, variances, map
approval, entitlements, permits or other governmental approvals.
(7) Any deviation of greater than ten percent (10%) from the expense
portion of the applicable Budget other than in relation to debt service, taxes
or utilities shall constitute an Arbitration Non-Unanimous Decision unless the
Managing Member shall effect such deviation through an amendment to the Budget
under the collaborative process set forth in Section 5.10 of this Agreement.
(8) Lease forms and leasing parameters for the office, retail and Dartmouth
Garage components of the Business Property for each calendar year (once
approved in writing by the Members or the Managing Member, herein called the
"Approved Lease Forms" and the "Approved Leasing Parameters" for the year in
question). However, the adoption of leasing parameters by the Managing Member
having a net differential greater than $5,000,000 with respect to leasing
parameters proposed by the NonManaging Member shall constitute in Arbitration
Non-Unanimous Decision.
(9) Any agreement with a tenant or prospective tenant providing for gross
rents of $5,000,000 or more over the entire term of the lease, including any
possible extension or option periods thereunder but excluding extension or
option periods of office leases which provide for rental at the higher of fair
market rent or the rent in effect prior to such extension or option periods,
The decision to enter into such an agreement shall be an Arbitration Non-
Unanimous Decision. At the request of either Member, the Company will enter
into a lease with a third party with respect to the Dartmouth Garage and other
garage facilities of the Company (which third party may be the present
operator of the garage facilities) for a term of one year or more under which
the payments by the tenant would constitute "rents from real property" within
the meaning of Section 856(d) of the Internal Revenue Code. Prior to the
expiration of such lease, a new lease shall be entered into by the Company, at
the request of either Member, such
17
<PAGE>
that the Dartmouth Garage and other garage facilities of the Company remain at
all times subject to leases under which the payments by the tenant constitute
"rents from real property." Notwithstanding the foregoing, any such lease
shall (i) be on economic terms which are no less favorable to the Company, the
Manager, or the Purchased Services Provider, than the parking/garage
agreement(s) in effect at the time of such request, (it) provide for a rental
which is based on the gross revenue from the, Garage and/or garage facilities,
and (iii) not alter the Company's responsibilities with respect to the upkeep
and real estate asset management (as opposed to day to day operational
management) of the Garage and/or garage facilities.
(10) The institution, prosecution, defense, dismissal or settlement of
any litigation, arbitration or mediation (other than with a Member) involving
the Company or its assets. Any such matter which involves an expense to or
actual or potential liability of the Company in excess of $5,000,000 shall
constitute an Arbitration Non-Unanimous Decision.
C. Unanimous approval Major Decisions. The following matters, in this
----------------------------------
Subsection 5. I.C shall require the prior written approval of both the
Managing Member and the Non-Managing Member before action binding on the
Company may be taken by the Managing Member with respect to such matter.
(1) Any sale or other transfer, by the Company involving all or any
significant portion of the Company Property, and the terms of and parties to the
documentation relating to the same.
(2) Any financing or refinancing including any modification or amendment of
the terms of the Existing Loan and the terms relating to the same by the Company
involving all or any portion of the Company Property, and the terms of and
parties to the documentation relating to the same, The Members acknowledge and
agree that the Company (a) shall pay monthly installments of interest hereafter
coming due with respect to the Existing Loan in an amount sufficient to repay
interest calculated at the "Contract Rate" in lieu of payment of interest
calculated at the "Pay Rate" (as such terms are defined -in the Existing Loan
Documents), and (b) may continue to negotiate with Existing Lender concerning
elimination of provisions in the Existing Loan Documents relating to (i) the
"Loan Escrow Account" (as defined in Exhibit "E" attached hereto), (ii)
subordination of compensation under the Management Agreement and the Purchased
Services Agreement, and (iii) the "Contingent Equity" rights (as described in
the Equity Payment Agreement), as the same are more particularly described in
Exhibit "E," and that upon refinancing of the Existing Loan, the principal
amount of the new mortgage loan shall be $195,000,000 (any balance due with
respect to the Existing Loan above such amount, to the extent in excess of the
$15,110,840.00 being contributed by the
18
<PAGE>
Managing Member pursuant to Section 3.6 hereof, shall be funded by the Members
by capital contributions in proportion to their Company Percentages).
(3) The selection and terms of engagement of any entity as the manager or
as a major provider of consulting or similar services to those provided under
the Purchased Services Agreement or the Management Agreement, including a
submanager but excluding leasing agents, provided that the Non-Managing Member
shall not unreasonably withhold or delay its consent to such selection and
engagement by the Managing Member following the termination of the Management
Agreement or of the Purchased Services Agreement. Notwithstanding the
foregoing, Manager has heretofore been engaged as the manager of the Business
Property pursuant to the Management Agreement, and Purchased Services Provider
has heretofore been engaged to provide financial, consulting and operational
services to the Business Property pursuant to the Purchased Services
Agreement. Notwithstanding the foregoing, in the event that an "Overseas
Exit" (as defined in the Purchased Services Agreement) shall occur and the
Purchased Services Agreement is terminated, the Managing Member shall propose
not less than 5 alternative qualified management companies to provide the
services described in the Purchased Services Agreement, and the Non-Managing
Member shall have the right to select one of the 5 as the successor provider.
Anything herein to the contrary notwithstanding, (i) in the event the
Purchased Services Agreement is terminated pursuant to Section 2.2.4 of the
Purchased Services Agreement (i.e. the Section thereof with respect to the
ownership by the "JMB Group" of the "Required Minimum Number" of "Adjusted
Shares", as such terms are defined in the Purchased Services Agreement), any
cost savings from any reduction in fees or sums paid to the provider's
replacement for the first 18 months of such replacement (or such portion
thereof as JMB or an Affiliate of IMB remains a Member), shall be distributed
entirely to JMB (without reducing any other amounts distributable to JMB), and
(ii) in the event the Purchased Services Agreement is terminated for any
reason, and the same is replaced with an agreement at lower fees or other
sums, Overseas shall cause the Management Agreement to be amended to provide
for a corresponding reduction in the fees and sums payable by the Company. In
addition, following an Overseas Exit, the successor to Overseas as Managing
Member shall not, without the prior written consent of the Non-Managing
Member, become (directly or indirectly) the Manager under the Management
Agreement and the Purchased Services Agreement. If the Management Agreement
shall be terminated for any reason, the Purchased Services Provider shall
become the Manager under the Management Agreement unless at the time of such
termination Purchased Services Provider shall be in default under the
Purchased Services Agreement.
(4) The acquisition of any additional real property unless both the
following criteria are met--(i) the property is either functionally or
geographically related to the, Business Property, and (ii) the purchase price
thereof is $1 million or less.
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<PAGE>
(5) Any concessions by the Company or restrictions on the Company or the
Business Property, in correction with obtaining zoning, variances, map
approval, entitlements, permits or other governmental approvals where any of
the foregoing relates to a major portion of the Business Property.
(6) Any transaction with a party related to or affiliated with a Member or any
compensation or reimbursement to, or other transaction with, a Member or any
party related to or affiliated with a Member except payment or compensation
under or pursuant to within the Management Agreement or other Purchased
Services Agreement; provided that the Non-Managing Member shall not
unreasonably withhold or delay its consent to such a transaction if it is upon
economic terms customary in similar transactions with non-related or non-
affiliated parties and is not otherwise a Unanimous Approval Major Decision.
Similarly, if the Non-Managing Member proposes that the Company engage a party
related to or affiliated with the Non-Managing Member, the Managing Member
shall not reject such proposal solely on the grounds of such relationship or
affiliation.
(7) Permit the Company to merge or consolidate with any other entity.
(8) Make, execute or deliver on behalf of the Company any assignment for the
benefit of creditors or any guarantee, indemnity bond or surety bond, other
than reasonable and customary bonds and assurances to governmental agencies in
connection with the obtaining of entitlements and other governmental approvals
or to lenders in connection with development or construction financing; or
obligate the Company or any Member as a surety, guarantor or accommodation
party to any obligation.
(9) File any petition, or consent to the appointment of a trustee or receiver
or any judgment or order, under the federal bankruptcy laws.
(10) Any transaction or action which could not reasonably be construed by the
Managing Member as being within the scope of the purposes of the Company as
set fourth in Section 1.4.
(11) Any revaluation of the Company Property and increase or decrease in the
Book Capital Account of the Members pursuant to Section 1.2C of Exhibit "C"
attached hereto.
As used herein, "Economic Injury" means any action which, in the judgment
of a reasonable business person, with knowledge of the then available facts,
would create a reasonable likelihood that the action will deprive the Company of
an otherwise reasonably expected material economic benefit or inflict an
otherwise reasonably avoidable material economic injury upon the Company or any
Member's economic interest in the Company.
20
<PAGE>
In the event. that either Member makes a proposal as to a unanimous
Approval Major Decision, and the other Member fails to agree thereto, such
proposal shall not be implemented, and there shall be no means (through
arbitration or otherwise) for such proposal to be implemented. Without
limitation of the foregoing or the provisions of Subsection 5. 1 C(l) above, the
Members acknowledge that there shall be no means (through arbitration or
otherwise) for the implementation of any proposal by either Member to sell the
Business Property if any other Member fails to agree thereto (each Member
recognizing that its sole means of realizing upon the value of its interest in
the Company is through a sale of its interest pursuant to the provisions of
Article VI below).
D. Prohibited Acts. No Member shall have any authority to:
---------------
(1) Amend this Agreement, except as expressly permitted herein.
(2) Extend the term of the Company,
(3) Do any act in contravention of this Agreement or which would make it
impossible to carry on the business of the Company.
(4) Except as a result of the liquidation of the Company, possess any
Company Property or assign the rights of the Company in specific Company
Property for other than a Company purpose.
(5) Admit a person or entity as a Member except as expressly provided in
this Agreement.
(6) Lend funds belonging to the Company or any Member to any Member or
third party or extend to any person, firm or corporation, credit on behalf
of the Company, except for extensions of credit to purchasers of parcels of
the Project in the ordinary course of business in accordance with the sale
terms approved by the Managing Member in accordance with subsection B
above.
E. Restrictions on Action, Notwithstanding any other provision of this
----------------------
Agreement or any other provision of law that otherwise so empowers the
Company to the contrary, until the date on which all obligations of the
Company under the Mortgage and the Loan are indefeasibly and fully
satisfied, the Company shall not do any of the following:
(a) engage in any business or activity other than those set forth in
Section 1,4 above;
(b) incur any indebtedness (including, but not limited to, loans from
Members), or assume or guaranty any indebtedness of any other entity, other
than the incurrence of the Loan and such other indebtedness as may be
permitted under the Mortgage;
21
<PAGE>
(c) dissolve or liquidate, in whole or in part, consolidate or merge with
or into any other entity or convey or transfer its properties and assets
substantially as an entirety to an entity;
(d) acquire all, or substantially all, of the assets or capital stock or
other ownership interest of any corporation or other entity;
(e) without the Consent of all of the Members institute proceedings to be
adjudicated bankrupt or insolvent, consent to the institution of bankruptcy
or insolvency proceedings against it, or file, or consent to, a petition
seeking reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, or consent to the appointment of a
receiver, liquidator, assignee, trustees sequestrator (or other similar
official) of the Company or any substantial part of its property, or make
an assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take corporate
action in furtherance of any such action; provided however, that if there
-------- -------
shall not be at least one (1) Independent Director as required pursuant to
Section 1.6 hereof, no vote upon any matter set forth in this Section 5.1 -
E. shall be taken unless and until such an Independent Member with such an
Independent Director shall have been duly admitted and voting.
F. Certain Affiliate Transactions. The terms of the Management Agreement
------------------------------
and the Purchased Services Agreement are hereby approved.
Section 5.2. Certain Obligations of Managing Member
--------------------------------------
A. Generally. Managing Member shall at all times act in a fiduciary
---------
capacity in exercising its power and authority, shall fully and faithfully
discharge its obligations and responsibilities, and shall devote such time and
attention to Company affairs as may be reasonably necessary for the proper
management and supervision of the Company's business and the discharge of its
duties under this Agreement. Managing Member shall diligently and continuously
pursue the operation of the Business Property, and shall make its personnel or
the personnel of its affiliates available to the Company to the extent necessary
in order that its obligations may be adequately discharged.
B. Administration of Company. Managing Member shall cause to be kept
-------------------------
proper and complete records and books of account in which shall be entered fully
and accurately all transactions and other matters relating to the Company's
business as are usually entered into such records and books of account kept for
business of a like character. The Company's records and books shall be kept on
a cash basis, except as the Managing Member may otherwise determine. At all
times, such books and records shall be available at the Company's principal
place of business for inspection, examination and photocopying by any
22
<PAGE>
other Member, or the duly authorized representative thereof, during reasonable
business hours. Any expense for such inspection shall be borne by the respective
Member causing the inspection.
C. Reports. The Managing Member shall provide each other Member with
-------
reports as follows:
(a) An annual report of all income and all expenses within 120 days
of the end of the calendar year, audited by an independent nationally recognized
"Big Six" accounting firm reasonably satisfactory to the Non-Managing Member.
(b) Monthly operating statements and reports of financial condition
of the Company for each calendar month submitted to the Members within 15 days
of the end of each such month.
(c) Such information as is necessary for the preparation by each
Member of its federal, state and local income tax returns,
(d) Such other reports as may be reasonably requested by any Member.
D. TM Matters. As further set forth in Exhibit "C" attached hereto, the
----------
Managing Member shall be the "Tax Matters Partner" and shall be responsible for
preparing the federal and state tax returns of the Company.
E. Notice of Direct Lease. Managing Member shall, within one hundred
----------------------
eighty (180) days after the date of this Agreement, cause to be delivered to
Urban and MTA a written notice of the Company's and Nominee's election to
convert the Central Area Sublease to a direct lease with MTA (upon the terms of
the Central Area Sublease), in accordance with Section 6 of the Direct Lease
Agreement-
Section 5.3. Other Activities. Except as otherwise provided in this
----------------
Agreement or in any agreement among the Members; (1) each Member recognizes that
each other Member has an interest in investing in, developing, constructing,
operating, transferring, Leasing and otherwise using real property and interests
therein for profit, and engaging in any and all activities related or incidental
thereto and that each will make other investments consistent with such
interests; (2) neither the Company nor any Member shall have any right by virtue
of this Agreement or the limited liability company Membership relationship
created hereby in or to any other ventures or activities in which any Member is
involved or to the -income or proceeds derived therefrom; (3) the pursuit of
other ventures and activities by each Member, even if competitive with the
business of the Company, is hereby consented to by such other Member and shall
not be deemed wrongful or improper- (4), no Member and no affiliate of a Member
shall be obligated to present any particular investment opportunity to the
Company, even if such opportunity is of a character which, if presented to the
Company, could be taken
23
<PAGE>
by the Company; and (5) each Member and each affiliate of a Member shall have
the right to take for its Own account, or to recommend to others, any such
particular investment opportunity.
Section 5.4 Liability of Members, Subject to the provisions of any other
--------------------
agreement to which the Members are parties, and except for the obligations to a
Member or Members of the Company imposed under such other agreement, no Member
shall be liable, responsible or accountable in damages or otherwise to the
Company or the Members for any action taken or failure to act by such Member on
behalf of the Company within the scope of the authority conferred on it by this
Agreement unless such action or omission constituted a material breach or
material default under this Agreement, a breach of fiduciary duty, gross
negligence or willful misconduct. Each Member shall act as a fiduciary with
respect to the other Member in all matters relating to the Company.
Section 5.5. Indemnity of Members The Company shall indemnify, defend
--------------------
and hold each Member harmless from and against any loss, expense, damage or
injury suffered or sustained by it by reason of any acts, omissions or alleged
acts or omissions by such Member on behalf of the Company within the scope of
authority conferred on it by this Agreement, including, any judgment, award,
settlement, reasonable attorneys' fees and other costs and expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided that the acts or omissions or alleged acts or omissions upon
which such actual or threatened action, proceeding or claim is based were in
good faith and did not constitute a breach or default under this Agreement, a
breach of fiduciary duty, gross negligence or willful misconduct.
Section 5.6. Compensation. No Member shall be entitled to any payment
------------
or compensation for the performance of its obligations under this Agreement
except as expressly provided in this Agreement, the Management Agreement and the
Purchased Services Agreement.
Section 5.7. Company Not Manager Managed Notwithstanding the
-----------------------------
foregoing, Managing Member shall not constitute a "manager" within the meaning
of Section 18-1 01 of the Act.
Section 5.8. Property Supervisors-. The Members agree that Managing
---------------------
Member shall cause Manager to employ for the duration of the term of the
Management Agreement the following four (4) individuals to be selected by the
"Personnel Committee" (as defined below).- (1) the first individual (the
"Property Supervisor") shall be responsible for general supervision of all
property management and leasing activities at the Business Property, including
supervision of the performance by Purchased Services Provider of its obligations
under the Purchased Services Agreement; (2) the second individual (the "Retail
Supervisor") shall be responsible, under the Property Supervisor, for
supervision of retail property management and leasing activities at the Business
Property, including supervision of the
24
<PAGE>
Performance by Purchased Services Provider of its Obligations under the
Purchased Services Agreement with respect to the leasing of the retail portion
of the Business Property; (3) the third individual (the "Office Supervisor")
shall be responsible, under the Property Supervisor, for supervision of office
property management and leasing activities at the Business Property; and (4) the
fourth individual (the "Accounting Supervisor") shall be responsible, under the
Property Supervisor, for the supervision of all accounting services to the
Company, including supervision of the performance by Purchased Services Provider
of its obligations under the Purchased Services Agreement with respect to the
accounting services to be performed by it under the Purchased Services
Agreement. The Property Supervisor, the Retail Supervisor, the Office Supervisor
and the Accounting Supervisor are hereinafter collectively referred to as the
"Supervisors". The Personnel Committee shall have sole authority and
responsibility for making all decisions concerning the hiring, termination,
compensation, and other terms of employment of the Supervisors, and Managing
Member shall cause Manager to implement the, decisions of the Personnel
Committee regarding the Supervisors. Pursuant to the Management Agreement,
Manager shall be solely responsible for supervision and control of the
Supervisors, and shall be responsible for compliance with all laws and
regulations affecting employment of the Supervisors, including the provisions of
any benefits or compensation required by statute or future contract in
connection with the Supervisors.
Section 5.9. Personnel Commitee. A personnel committee shall be
------------------
established within the Company (the "Personnel Committee"), which shall be
comprised initially of two (2) individual members designated by the Managing
Member, and one (1) individual member designated by the Non-Managing Member, and
such Personnel Committee shall have sole authority and responsibility for making
all decisions concerning the hiring, termination, compensation, and other terms
of employment of the Supervisors. Each of the Non-Managing, Member and the
Managing Member shall have the right from time to time to replace any member of
the Personnel Committee designated by it as provided above as it deems
appropriate by written notice to the other party. Managing Member hereby
designates each of Bruce M, Barone and Michael Molletta as its initial members
of the Personnel Committee, and Non-Managing Member hereby appoints H. Rigel
Barber as its initial member of the Personnel Committee. In no event shall any
member of the Personnel Committee have any personal liability in connection with
its membership and activities of the Personnel Committee. The Personnel
Committee shall have exclusive authority for ensuring compliance with all laws
and regulations affecting employment of all employees of the Company, including
the provisions of any benefits or compensation required by statute or future
contract. The Personnel Committee shall meet telephonically or in person at
least once each calendar year in order to discharge its duties (or within ten
(IO) days after the written request of any member of the Personnel Committee).
Subject to the last sentence of this Section, all actions and decisions of the
Personnel Committee shall require the approval of at least the majority of the
members of the Personnel Committee, and each Member shall cause each member of
the Personnel Committee designated by it to act with reasonable care iii
connection its activities in connection with the Personnel Committee (including
any
25
<PAGE>
proposals, approvals or disapproval's made by such member in connection with the
Personnel Committee)- The Personnel Committee has determined that the initial
Supervisors to be hired by Manager on the date hereof are the following
individuals (the "Initial Supervisors"). (1) Paul C. Grant shall be the Property
Supervisor; (2) Robert Prendergast shall be the Retail Supervisor; (3) Peter J.
Dominski shall be the Office Supervisor; and (4) an individual to be designated
by the Personnel Committee within thirty (30) days after the date hereof shall
be the Accounting Supervisor. The termination and any changes to the
compensation and other terms of employment of any of the Initial Supervisors
shall require the unanimous approval of the members of the Personnel Committee
and the member designated by Non-Managing Member may act as he deems best, in
his sole and absolute discretion-
Section 5.1 0. Annual Budget, The Manager shall, within ninety (90) days
-------------
prior to the commencement of each calendar year, submit to each of the Members a
proposed annual budget with respect to the operations of the Company and the
Business Property for the upcoming calendar year. The final budget for such
calendar year (each such budget being referred to herein as a "Budget") shall be
determined by Managing Member only after a collaborative and advisory process
involving both the Managing Member and the NonManaging Member, and shall contain
a comprehensive projection of all proposed cash expenditures, capital
expenditures and Company reserves- provided that, the Managing Member shall not
include in any Budget reserves or expenditures that, in nature or amount, would
constitute a breach of the Managing Member's fiduciary duties to the Non-
Managing Member or would result in an Economic Injury to the Non-Managing
Member.
Section 5.1 1. Maintenance of Separate Business.- The Company shall at
----------------------------------
all times (a) allocate fairly and reasonably any overhead expenses that are
shared with any Affiliate, including paying for office space and services
performed by any employee of an Affiliate, (b) maintain its books, financial
statements, accounting records and other corporate documents and records
separate from those of any Affiliate or any other entity, (c) not commingle its
assets with those of any Affiliate or other entity, (d) maintain its books of
account, bank accounts and payroll separate from those of any Affiliate or any
other entity, (e) act solely in its own name and through its own authorized
officers and agents and in all respects hold itself out as a legal entity
separate and distinct from its Members and any other entity, (f) maintain an
arm's-length relationship with each Affiliate and enter into all transactions
with any Affiliate only upon a commercially reasonable basis, (g) separately
manage the Company's liabilities from those of its Members and all other-
Affiliates and pay its own liabilities, including all administrative expenses
and compensation to employees, consultants or agents, and all operating
expenses, from its own separate assets, except that a Member or other Affiliate,
pursuant to management arrangements, may pay the organizational expenses of the
Company and maintain a sufficient number of employees in light of the Company's
contemplated business operations, (h) not acquire obligations or securities of
the Company's Members or Affiliates, (i) use separate stationery, invoices and
checks bearing its own name, (j) not pledge the Company's assets for the benefit
of any other person or entity, or make any loans or advances to any other
entity, or buy or hold evidence of indebtedness issued by any
26
<PAGE>
other person or entity (except for cash and - investment grade securities), (k)
correct any known misunderstanding regarding the Company's separate identity,
and (1) maintain adequate capital in light of its contemplated business
operations. The Company shall abide by all organizational formalities,
including the maintenance of current minute books, and the Company shall cause
its financial statements to be prepared separate from any Affiliate in
accordance, with generally accepted accounting principles in a manner that
indicates the separate existence of the Company and its assets and liabilities,
The Company shall (i) pay all its liabilities, and (ii) not assume or guaranty,
or hold out its credit as being able to satisfy, the liabilities of any Member
or other Affiliate or any other entity. The officers, directors and Members of
the Company (as appropriate) shall make decisions with respect to the business
and daily operations of the Company independent of and not dictated by any
Member or other Affiliate. The Members of the Company shall be required to
consider the interests of the creditors of the Company in connection with all
actions conducted by the Company.
ARTICLE VI TRANSFER OF COMPANY INTERESTS.
-----------------------------------------
Section 6. 1. Restrictions on Transfer.
------------------------
A. Except as otherwise expressly provided in this Section 6. 1, no sale,
assignment, transfer, encumbrance or hypothecation shall be made by a Member of
the whole or any part of its Company interest (including its interest in the
capital or profits of the Company) without the prior written consent of the
other Member,
B. No sale, assignment, transfer, encumbrance, hypothecation or issuance
in violation of the provisions hereof shall be valid or effective for any
purpose, and no consent to one or more of the same shall be deemed consent to
any other of the same.
C. So long as any obligations of the Company under the Loan and the
Mortgage remain outstanding, no transfer of any direct or indirect ownership
interest in the Company such that either (i) the transferee becomes the owner of
more than a 49% interest in the Company, or (ii) the transferee is an affiliate
or a family member of a transferor which owned more than a 49% interest in the
Company before such transfer, may be made unless, prior to the consummation of
such transfer, the Company has caused to be delivered to the Lender and to any
applicable Rating Agency an acceptable non-consolidation opinion concerning, as
applicable, the Company, the new transferee and/or their respective owners.
Section 6.2. Effect of Assignment Documents. In the event of any sale,
------------------------------
assignment or transfer permitted hereunder, the Company shall not be dissolved
or wound up but instead shall continue as before, with, however, the addition
or substitution of such new Member. No such sale, assignment or transfer shall
relieve the assignor from any of its obligations under this Agreement without
the prior written consent of all Members (which consent shall not be
unreasonably withheld as to obligations assumed by an assignee provided, among
other matters, the assignment is permitted hereunder and the Managing Member are
reasonably
27
<PAGE>
satisfied that the assignee is sufficiently creditworthy to timely satisfy such
obligation). Notwithstanding the foregoing, as a condition to any sale or
assignment by a Member, the transferee or assignee must execute and deliver to
the other Member an assumption (in form reasonably satisfactory to all Members)
of all the obligations of the assignee under this Agreement arising from and
after the date of such assignment.
Section 6.3. Permitted Assignments.. Notwithstanding the provisions of
----------------------
Section 6.1 hereof, either Member may, with the consent of the other Member
(such consent not to be unreasonably withheld or delayed), assign or transfer in
whole (but not in part) its Company interest (including, but not limited to, its
interest in the capital or profits of the Company), at any time to an Affiliate
of a Member (and in the event of such assignment, the transferor shall remain
liable for the obligations and liabilities hereunder in the same manner and to
the same extent as if such assignment had not been made), Overseas hereby
consents to the transfer of JMB's interest to Urban Shopping Centers, L.P. or
to a limited partnership of which the sole general partner is and shall remain
Urban Shopping Centers, Inc. (or its wholly owned subsidiary) and the sole
limited partner in which is and shall remain Urban Shopping Centers, L.P. In
addition, either Member may assign or transfer its Company Membership interest
in whole (but not in part) to an entity which is not an Affiliate of such
Member, provided all of the following conditions are met: (1) the non-
transferring Member must have approved of the transferee, (ii) the transferor
must have complied with the provisions of Section 6,4 below (the right of first
refusal there-in set forth), (iii) the purchase price payable for the interest
must be payable entirely in cash or in cash and promissory notes which are not
secured by such interest, (iv) any consent or approval required under any loan
documents to which the Company is a party or to which the Company Property is
subject has been obtained at the sole cost and expense of the transferring
Member, and (V) the transferee must be of good business reputation and
character. Anything herein to the contrary notwithstanding, no transfer by a
Member (whether direct or indirect) shall be effective if it would or may cause
the Company to be treated as an association taxable as a corporation, or if
such transfer is effected through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)," within the meaning
of Section 7704 of the Code.
Section 6.4. Right of First Refusal on Sale of Company Interests.
-----------------------------------------------------
Before either Member (the selling member herein called the "Selling Member")
actually concludes a sale of its Company interest permitted hereunder to a
person or entity other than an Affiliate of the Selling Member, and after the
requirements of Section 6.3 have been satisfied, the Selling Member shall give
notice (the "SALE NOTICE") to the other Member (the "NON-SELLING MEMBER")
setting forth the identity of the proposed purchaser, the purchase price and the
terms of payment of the proposed sale. The Non-Selling Member will have 30 days
after the giving of such notice to elect, by giving written notice (the
"PURCHASE NOTICE") to the Selling Member, to acquire the Selling Member's
interest in the Company for the purchase price and terms therein specified in
the Sale Notice, and 90 days after the making of such election to close such
sale. If such election shall not be made, then the Selling Member may conclude a
sale to the proposed purchaser at any time or times within 180 days after the
giving of the Sale
28
<PAGE>
Notice for a purchase price and on terms which are at least as favorable to the
Selling Member as those contained in the Sale Notice; but if a sale is not
consummated within such period, then the rights of the Non-Selling Member to
notice and purchase as aforesaid shall continue as to any new sale. If, on the
other hand, the Non-Selling Member make such election to acquire such interest
from the Selling Member but fails to consummate the purchase, then without
limitation on the rights and remedies of the Selling Member, the rights of such
Non Selling Member under this Section 6.4 shall be permanently lost.
Section 6.5. Withdrawal. Except as set forth in this Agreement, no Member
------------
may resign, retire or otherwise withdraw from the Company.
ARTICLE-VII CERTAIN REMEDIES.
----------------------------
Section 7,1. [Intentionally Omitted]
Section 7.2. No Partition. Each Member hereby irrevocably waives any and
------------
all rights that it may have to maintain any action for partition of any of the
Company Property.
Section 7.3. Litigation Without Termination. Either Member shall be
------------------------------
entitled to maintain, on its own behalf or on behalf of the Company, any action
or proceeding against the other Member or the Company (including, without
limitation, any action for damages, specific performance or declaratory relief)
for or by reason of breach by such party of this Agreement or any other
agreement entered into in connection with the same, notwithstanding the fact
that any or all of the parties to such proceeding may then be Members in the
Company, and without dissolving the Company as a limited liability company.
Section 7.4. Attorneys Fees If the Company or any Member obtains a
--------------
judgment against any other Member by reason of breach of this Agreement or
failure to comply with the provisions hereof, a reasonable attorneys' fee plus
other costs and expenses as fixed by the court shall be included in such
judgment.
Section 7.5, Cumulative Remedies. Except for arbitration as provided in
-------------------
Section 7.7 (which shall permit the judicial enforcement of any decision by
arbitration under Section 7.7), no remedy conferred upon the Company or any
Member in this Agreement is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity or by statute (subject, however, to the limitations expressly
herein set forth)-
Section 7.6, No Waiver. No waiver by a Member or the Company of any
---------
breach of this Agreement shall be deemed to be a waiver of any other breach of
any kind or nature, and no acceptance of payment or performance by a Member or
the Company after any such
29
<PAGE>
breach shall be deemed to be a waiver of any breach of this Agreement, whether
or not such Member or the Company knows of such breach at the time it accepts
such payment or performance. No failure or delay on the part of a Member or the
Company to exercise any right it may have shall prevent the exercise thereof by
such Member or the Company at arty time such other may continue to be so in
default, and no such failure or delay shall operate as a waiver of any default.
Section 7.7. Arbitration.
-----------
ARBITRATION OF DISPUTES
-----------------------
A. SUBJECT TO THE PROVISIONS OF THIS SECTION 7.7, ANY DISPUTE AS TO AN
ARBITRATION NON-UNANIMOUS DECISION SHALL BE, RESOLVED SOLELY BY ARBITRATION IN
BOSTON, MASSACHUSETTS, IN ACCORDANCE WITH THE FOLLOWING:
(1) A DISPUTE AS TO AN ARBITRATION NON-UNANIMOUS DECISION FOR
PURPOSES OF THIS SECTION 7.7 SHALL ONLY BE DEEMED TO OCCUR IF (A) THE NON-
MANAGING MEMBER RECEIVES A WRITTEN STATEMENT FROM THE MANAGING MEMBER OF A
PROPOSED DECISION OR ACTION AND THE NON-MANAGING MEMBER GIVES WRITTEN NOTICE TO
THE MANAGING MEMBER OF A DIFFERENT OR CONTRARY POSITION AND IN SUCH NOTICE
DESIGNATES SUCH POSITION AS AN "ARBITRATION TRIGGER"OR (B) IF EITHER MEMBER
MAKES A WRITTEN PROPOSAL TO THE OTHER AND THE OTHER MEMBER GIVES WRITTEN NOTICE
TO THE FIRST MEMBER OF A COUNTER-PROPOSAL AND DESIGNATES SUCH COUNTER-PROPOSAL
AS AN "ARBITRATION TRIGGER." IN THE EVENT OF SUCH A DISPUTE, EITHER MEMBER MAY
(BUT IN ALL EVENTS IN ORDER TO BRING THE DISPUTE UNDER ARBITRATION, ONE OF THE
MEMBERS MUST) CLAIM ARBITRATION BY NOTICF, TO THE OTHER WITHIN 15 DAYS AFTER THE
GIVING OF A NOTICE DESIGNATING AN ARBITRATION TRIGGER, THE MANAGING MEMBER SHALL
NOT IMPLEMENT AN ARBITRATION NON-UNANIMOUS DECISION UNLESS AT LEAST 15 DAYS (60
DAYS IN THE CASE OF A PROPOSED CAPITAL EXPENDITURE) HAVE EXPIRED AFTER NON-
MANAGING MEMBER'S RECEIPT OF THE MANAGING MEMBER'S WRITTEN PROPOSAL WITHOUT THE
DELIVERY TO MANAGING MEMBER OR AN ARB1TRATION TRIGGER NOTICE, OR IF SUCH AN
ARBITRATION TRIGGER NOTICE IS SO DELIVERED, FOR AN ADDITIONAL PERIOD OF 15 DAYS
WITHOUT DELIVERY TO MANAGING MEMBER OF A CLAIM OF ARBITRATION. IF ARBITRATION IS
TIMELY CLAIMED, THE NON MANAGING MEMBER SHALL NOT IMPLEMENT ITS PROPOSAL UNTIL
THE DECISION OF THE ARBITRATOR IS RENDERED, AND THEN SHALL DO SO IN ACCORDANCE
WITH SUCH DECISION. IF NEITHER PARTY MAKES SUCH CLAIM IN TIMELY FASHION,
MANAGING MEMBER SHALL BE FREE TO ACT AS IT HAS PROPOSED TO DO.
30
<PAGE>
(2) THE PARTY CLAIMING ARBITRATION SHALL GIVE, WRITTEN NOTICE OF THAT
FACT TO THE OTHER, ACCOMPANIED BY A DESIGNATION OF AN ARRITRATOR; IF THE OTHER
PARTY FAILS TO DESIGNATE ANOTHER ARBITRATOR BY WRITTEN NOTICE TO THE FIRST PARTY
WITHIN THE TIME PERIOD DESCRIBED BELOW, THE ARBITRATOR SHALL BE THE PERSON
DESIGNATED BY THE FIRST PARTY, IF THE OTHER PARTY DESIGNATES ANOTHER ARBITRATOR
WITHIN SUCH PERIOD, THEN THE TWO ARBITRATORS SO DESIGNATED SHALL SELECT A THIRD
ARBITRATOR AS SOON AS PRACTICABLE THEREAFTER, AND THE ARBITRATION SHALL BE
CONDUCTED BY THE THIRD ARBITRATOR. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
REQUIRED TIME PERIODS SHALL EACH BE 15 DAYS AFTER THE RESPECTIVE DESIGNATION.
(3) THE MEMBERS AND THE ARBITRATORS SHALL USE THEIR MUTUAL DILIGENT
EFFORTS TO CAUSE THE ARBITRATION TO BE CONDUCTED AND A DECISION RENDERED WITHIN
60 DAYS THEREAFTER.
(4) THE ARBITRATOR SHALL CONDUCT THE ARBITRATION GENERALLY IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, WITH SUCH
MODIFICATIONS THEREOF AS THE ARBITRATOR MAY DEEM APPROPRIATE.
(5) THE ARBITRATOR MAY RETAIN COUNSEL (UNRELATED TO ANY MEMBER) TO
ADVISE THEM AS TO THE INTERPRETATION OF THE COMPANY AGREEMENT OR OTHER LEGAL
MATTERS, THE COST OF WHICH SHALL BE A COST OF THE ARBITRATION,
(6) THE ARBITRATION SHALL BE ENTITLED TO REASONABLE COMPENSATION AND
REIMBURSEMENT OF EXPENSES AS MUTUALLY AGREED WITH THE MEMBERS, OR IF THEY ARE
UNABLE TO AGREE THEN AS REASONABLY DETERMINED BY THE ARBITRATOR.
(7) THE COMPENSATION OF THE ARBITRATOR AND OTHER COSTS OF THE
ARBITRATION SHALL BE BORNE BY THE MEMBER WHOSE PROPOSAL OR POSITION IS NOT
SELECTED AS PROVIDED IN SUBSECTION 7.7B BELOW.
(8) THE AWARD AND ALL OTHER DECISIONS OF THE ARBITRATOR SHALL BE FINAL
AND BINDING UPON THE MEMBERS AND THE COMPANY, AND A JUDGMENT MAY BE RENDERED
THEREON IN ANY COURT OF RECORD, EXCEPT THAT ANY MEMBER MAY CONTEST AND OBTAIN
JUDICIAL REVIEW OF THE REASONABLENESS OF THE ARBITRATOR'S DETERMINATION OF
COMPENSATION PURSUANT TO CLAUSE (5) ABOVE.
31
<PAGE>
B. THE ONLY ISSUE TO BE DETERMINED BY THE ARBITRATOR SHALL BE
WHETHER, BASED ON THEIR RELATIVE MERITS., THE PROPOSAL OR POSITION OF THE
MANAGING MEMBER OR THE PROPOSAL OR POSITION OF THE NON-MANAGING MEMBER IS TO BE
SELECTED, AND THE ARBITRATOR SHALL CHOOSE BETWEEN THE TWO PROPOSALS OR POSITIONS
WITHOUT ALTERATION OR COMPROMISE OF THE CHOSEN PROPOSAL OR POSITION.
C. DISPUTES UNDER PROVISIONS OF THIS AGREEMENT OTHER THAN AS TO
ARBITRATION NON-UNANIMOUS DECISIONS SHALL NOT BE RESOLVED BY ARBITRATION UNLESS
THE PARTIES OTHERWISE AGREE IN WRITING IN THEIR SOLE AND ABSOLUTE DISCRETION,
EXCEPT THAT THE ARBITRATOR SHALL HAVE THE AUTHORITY TO DETERMINE ISSUES UNDER
OTHER PROVISIONS OF THIS AGREEMENT TO THE EXTENT NECESSARY TO ACHIEVE A
DECISION.
ASSENT TO ARBITRATION PROVISION
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE, ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE, THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.
- -------------------------- -----------
OVERSEAS JMB
ARTICLE VIII DISSOLUTION OF THE COMPANY
---------------------------------------
Section 8.l. Events Giving Rise to Dissolution. No act, thing,
---------------------------------
occurrence, event or circumstance shall cause or result in the dissolution of -
the Company, except that, subject to the provisions of Section 5.l.E(c) and
Section 8.2 hereof, the happening of any one of the following events shall
result in a dissolution of the Company upon the occurrence thereof.
A- The sale of all of the real estate assets of the Company (provided,
however, that if a portion of the purchase price of such sale is evidenced by a
promissory note, the
32
<PAGE>
Company shall not be dissolved by reason of such sale so long as the Company is
the holder of such promissory note).
B. The unanimous agreement in writing by the Members to dissolve the
Company
Notwithstanding anything in this Agreement or in the Act to the contrary,
neither the death, retirement, resignation, expulsion nor dissolution of a
Member, nor (subject to Section 8. 1 A above) any other event which terminates
the continued membership of any Member in this Company, shall result in the
dissolution of the Company, and the Company shall continue in existence
notwithstanding the occurrence thereof
Without limitation on the other provisions hereof, neither the assignment of all
or any part of a Member's interest in the Company permitted hereunder nor the
admission of a new member shall result in the dissolution of the Company.
Except as otherwise provided in this Agreement, each Member agrees that, (1)
without the consent of the other Members, a Member may not withdraw from or
cause a voluntary dissolution of the Company, and (ii) so long as the
obligations of the Company under the Mortgage and the Loan are outstanding, it
shall not withdraw from or cause a voluntary dissolution of the Company.
Section 8.2. Purchase Options. In the event of the Bankruptcy of A
----------------
Member (such event being here-in called the "DISSOLUTION EVENT" and such Member
being herein called the "DISSOLUTION MEMBER"), then the other Member shall have
the option, exercisable by written notice (the "DISSOLUTION/PURCHASE ELECTION
NOTICE") to the Dissolution Member or its personal representative, successor or
assign at any time within 21 0 days after it learns of the Dissolution Event, to
purchase the Company interest of the Dissolution Member (any such Member being
herein collectively called the "ELECTING MEMBER'S on the terms hereinafter set
forth (such option being herein called the "COMPANY PURCHASE OPTION"). Nothing
herein shall be deemed to require any Member to exercise such Company Purchase
Option.
In the event of the exercise of the Company Purchase Option, the
consideration for the purchase of the Dissolution Member's Company interest
shall be the amount (if any) that will produce for the Dissolution Member the
same amount in cash as it would have received if the Business Property owned by
the Company at the date on which the Dissolution Event occurs, had been sold at
its then fair market value ("Fair Market Value"), after deducting all closing
costs (including attorneys' fees, title insurance costs, brokers' fees and
recordation costs) that would customarily be paid by the seller of properties
of, like kind and stature, and the Company had been dissolved and wound up
following such sale.
(1) The Fair Market Value of such Business Property shall be as agreed upon
by the Electing Member and the Dissolution Member, or if they fail to agree upon
such value within 45 days after the giving of the Dissolution/Purchase Election
Notice, then as determined by appraisal, in accordance with procedure set forth
in Exhibit "D." The electing
33
<PAGE>
Member may rescind its Dissolution/Purchase Election Notice at any time up until
the date which is 30 days after the Fair Market Value of the Business Property
has been determined.
(2) Any sum payable for the Dissolution Member's Company interest as
hereinabove determined must be paid in cash within 60 days after the
determination of the amount of the same as aforesaid. Concurrently with the
payment of such sum (or if no amount shall be payable for such interest, then
upon demand of the assignee), the assignor of such interest shall deliver or
cause to be delivered to such assignee such assignments of Company interest and
other instruments and documents confirming the assignment and transfer as such
assignee shall reasonably request. The acquisition of such Company -interest as
aforesaid shall be deemed effective as of the date on which the Dissolution
Event occurred ("DISSOLUTION EVENT DATE"), and, accordingly, the assignee shall
be entitled to all profits and losses and distributions of Distributable Cash
for any period after the Dissolution Event Date.
(3) Each Electing Member may assign its rights under this Section 8.2 to
purchase the Dissolution Member's Company interest.
Section 8.3 [Intentionally Omitted)
Section 8.4. Dissolution Procedure.
---------------------
A. In the event of the dissolution of the Company for any reason, the
Managing, Member (or, if the Managing Member is Bankrupt or dissolved, then the
Non-Managing Member) shall commence to wind up the affairs of the Company and to
liquidate its investments. The Member obligated to wind up the affairs of the
Company as aforesaid is herein called the "WINDING-UP MEMBER," The Members shall
continue to share profits, losses, gain or loss on sale or disposition, and
Distributable Cash during the period of liquidation in the same manner and
proportion as though the Company had not dissolved.
B. Following the payment of all debts and liabilities of the Company and
all expenses of liquidation, and subject to the right of the Winding-Up Member
to set up such cash reserves as and for so long as it may deem reasonably
necessary in good faith for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation and any other funds
of the Company shall be distributed in accordance with the positive balance in
each Member's "Book Capital Account" (as defined in Exhibit "C" hereto) and, in
the event of any excess proceeds, in accordance with the Member's respective
Company Percentages after deducting from the distributive share of a Member any
sum such Member owes the Company, together with accrued and unpaid interest
thereon.
C. Each Member shall look solely to the assets of the Company for all
distributions with respect to the Company and its Capital Contribution thereto
and share of Profits or Losses thereof and shall have no recourse therefor (in
the event of any deficit in a Member's Capital Account or otherwise) against the
other Member; provided that nothing
34
<PAGE>
herein contained shall relieve any Member of such Member's obligation to make
any Capital Contribution herein provided or to pay any liability or indebtedness
owing the Company by such Member, and the Company and the other Member shall be
entitled at all times to enforce such obligations of such Member. No holder of
a Company interest shall have any right to demand or receive property other than
cash upon dissolution and termination of the Company; provided that, the Company
may distribute all or any portion of the Company Property in kind with the
written consent of all Members, which consent may be withheld in the sole and
absolute discretion of any Member.
D. Upon the completion of the liquidation of the Company and the
distribution of all Company Property and funds, the Company shall terminate and
the Winding-Up Member shall have the authority to execute and record a
certificate of cancellation of the Company, as well as any and all other
documents required to effectuate the dissolution and termination of the Company-
Section 8.5. Certain Matters as to Non Association Status. In the event
--------------------------------------------
that under both Federal and Massachusetts income tax law, the elimination of
Section 8. 1 A will not cause the Company to be treated as an association taxed
as if it were a corporation, then, notwithstanding any other provisions of this
Agreement to the contrary, neither the Bankruptcy of a Member nor any other
event which terminates a Member's continued membership in the Company will be a
Dissolution Event, and accordingly, the provisions of Sections 8.1, 8.2 and 8.4
will not apply to such Member.
ARTICLE IX MISCELLANEOUS.
-------------------------
Section 9.1. Notice Any notice,, which a party is required or may desire to
------
give the other party shall be in writing and may be delivered (1) personally,
(2) by United States registered or certified mail, postage prepaid, or (3) by
United Parcel Service or other reputable courier service regularly providing
evidence of delivery (with charges paid by the party sending the notice). Any
such notice shall be addressed as follows (subject to the right of A party to
designate a different address for itself by notice similarly given)-.
To Overseas:
------------
Overseas Partners Capital Corp.
115 Perimeter Center Place, Suite 940
Atlanta, GA 30346
Attention: Bruce M. Barone, President
with a copy to-
Overseas Partners Ltd.
Craig Appin house
35
<PAGE>
P.O. Box HM1581
8 Wesley Street
Hamilton 14M GX BERMUDA
Attention: Bruce M. Barone, President
with copy to:
Overseas Partners Capital Corp.
115 Perimeter Center Place, Suite 940
Atlanta, GA 30346
Attention: Legal Department
with copy to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
Attention: John C. Thomson, Esq.
To JMB:
-------
JMB Realty Corporation
900 North Michigan Avenue, Suite 1900
Chicago, Illinois 60611
Attention: Rigel Barber
with copy to:
JMB Realty Corporation
900 North Michigan Avenue, Suite 1900
Chicago, Illinois 60611
Attention: General Counsel
and with copy to-
Pircher, Nichols & Meeks
1999 Avenue of the Stars, 26th Floor
Los Angeles, California 90067
Attention: Real Estate Notices (PGN)
To Copley:
----------
[addresses to be supplied]
36
<PAGE>
Any notice so given by United States mail or courier service shall be deemed to
have been given on the date delivered (whether accepted or refused) as evidenced
by the return receipt or other proof of delivery. Any notice not so given by
U.S. mail or courier service shall be deemed to be given upon receipt of the
same by the party to whom the same is to be given,
Section 9.2. Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties, This Agreement supersedes any prior agreement or
understandings between the parties.
Section 9.3. Amendments. This Agreement may be amended by written
----------
agreement of amendment executed by all Members, but not otherwise.
Notwithstanding the foregoing or any other provision of this Agreement, so long
as any obligations of this Company under the Mortgage and the Loan are
outstanding, the Company shall not amend, alter, change or repeal any of
Sections 1.4, 1.6, (including the definitions relating thereto), 3.3, 5.1E,
5.11, 6.1.C., 8.1 and this Section 9.3, Unless any such amendment, alteration,
change or repeal receives (i) the prior written consent of the Lender, and (ii)
the prior written confirmation from any Rating Agency (as defined in the
Mortgage), if any, then maintaining a rating in connection with any
securitization or participation of interests in the Loan that such amendment,
alteration, change or repeal would not result in the qualification, withdrawal
or downgrade of any securities rating.
Section 9.4. Governing Law, This Agreement and the rights of the parties
-------------
under it shall be interpreted, construed and enforced in accordance with
the internal laws of the State ,of Delaware without regard to principles of
conflicts of laws.
Section 9.5. Successors and Assigns Except as herein otherwise
----------------------
specifically provided, this Agreement shall be binding upon and inure to the
benefit of the parties and their legal representatives, successors and assigns.
Section 9.6. Captions. Captions contained in this Agreement in no way
--------
define, limit or extend the scope or intent of this Agreement.
Section 9.7. Severability. If any provision of this Agreement, or the
-----------
application of such provision to any person or circumstances shall be held
invalid, the remainder of this Agreement, or the application of such provision
to the persons or circumstances, shall not be affected thereby.
Section 9.8. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
Section 9.9. No Third Party beneficiaries. Nothing in this Agreement,
----------------------------
expressed or implied, is intended to confer any rights or remedies upon any
person, other than the parties
37
<PAGE>
hereto and, subject to the, restrictions on assignment herein contained, their
respective successors and assigns.
Section 9.10. Certain Terminology.
-------------------
(1) Whenever the words "including,, include" or "includes" are used in
this Agreement, they should be interpreted in a non-exclusive manner as though
the words, "without limitation," immediately followed the same.
(2) Except as otherwise indicated, all Article, Section and Exhibit
references in this Agreement shall be deemed to refer to the Sections and
Articles in, and the Exhibits to, this Agreement.
Section 9.11. Limitation of liability- No present or future partner,
------------------------
member, officer, director, shareholder, employee, affiliate, advisor or agent of
either Member shall have any personal liability, directly or indirectly, under
or in connection with this Agreement.
Section 9.12. Incorporation of Exhibits. All exhibits attached and
-------------------------
referred to in this Agreement are hereby incorporated herein as fully set forth
in (and shall be deemed to be a Part of) this Agreement,
(this space left blank intentionally)
38
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Second Amended and
Restated Limited Liability Company Agreement as of the date first above written
OVERSEAS PARTNERS CAPITAL CORP.,
a Delaware corporation
By: /s/ Bruce Barone
----------------
Name: Bruce M. Barone
Title: President
"Managing Member"
JMB REALTY CORPORATION,
a Delaware corporation
By: /s/ Elizabeth Kogen
-------------------
Name: Elizabeth R. Kogen
Title: Vice President
COPLEY PLACE CORP., INC.
a Delaware corporation
By: /s/ Bruce M. Barone
-------------------
Name: Bruce M. Barone
Title: President
"Independent Member"
39
<PAGE>
COMPANY AGREEMENT EXHIBITS
--------------------------
A - Members Capital Contributions
B - Business Property Legal Description
C - Certain Tax and Accounting Matters
D - Method of Determining Fair Market Value
E - Provisions Concerning Existing Loan
<PAGE>
EXHIBIT "A"
-----------
Members Contributions
---------------------
Overseas $15,110,840.00
JMB $0.00
Copley $_________
A-1
<PAGE>
EXHIBIT "B"
-----------
BUSINESS PROPERTY LEGAL DESCRIPTION
-----------------------------------
[TO BE ADDED]
B-1
<PAGE>
EXHIBIT "C"
-----------
Certain Tax And Accounting Matters
----------------------------------
Copley Place Associates, LLC
The following provisions set forth the rules governing, among other
matters, the maintenance of capital accounts, the allocation of profits and
losses, and the maintenance books and records of Copley Place Associates, LLC
(the "Company,,) pursuant to Section 2,1 of the Second Amended and Restated
Limited Liability Company Agreement (the "Agreement") to which this Exhibit "C"
is attached and of which this Exhibit "C" is a part. Except as otherwise
indicated, each capitalized term used herein shall have the meaning set forth
for the same in the Agreement.
ARTICLE 1. CAPITAL ACCOUNTS.
----------------------------
Section 1. Maintenance of Capital Accounts General Rules. A separate
---------------------------------------------
"Book Capital Account" (as defined in Section 1.2 of this Exhibit "'C") shall be
maintained for each Member in accordance with the provisions of this Article I.
Section 1.2. Book Capital Accounts. A capital account (the "Book
---------------------
Capital Account') for each Member shall be established and maintained at all
times during the term of the Company in accordance with this Section 1.2 and the
capital account maintenance rules set forth in Sections 1.704-1 (b)(2)(iv) and
1.704-2 of the Income Tax Regulations, as the same may be amended from time to
time ("Income Tax Regulations"). In the event that at any time during the term
of the Company it shall be determined that the Book Capital Accounts shall not
have been maintained as required by this Section 1.2, then said accounts shall
be retroactively adjusted so that the same shall Conform to this Section 1.2.
A. Initial Book Basics of Business Property. The Members agree
----------------------------------------
that the, aggregate "Book Basis" (as hereinafter defined) as of the date hereof
but following the making, of the contributions required as described in Section
3.1 of the Operating Agreement, of the Business Property is $324,900,000.00. As
used herein, "BOOK BASIS" OF an item of Company Property means the adjusted
basis of such item as reflected IN the books OF the Company, determined and
maintained in accordance with the capital accounting rules contained in Section
1.7804-1 (b)(2)(iv) of the Income Tax Regulations.
B. Initial Book Capital Accounts. As used herein, the
-----------------------------
"INITIAL BOOK CAPITAL ACCOUNT" of each Member means the Book Capital Account as
of the date hereof but following the making of the contributions required as
described in Section 3-1 of the Operating Agreement, The Initial Book Capital
Account of each Member shall be as follows:
C-1
<PAGE>
Overseas $79,697,540.00
JMB $39,848,770.00
Copley $_____________
C. Optional Revaluation's of Company Property The Company may
------------------------------------------
make the election to revalue Company property and to increase or decrease the
Book Capital Accounts of the Members as permitted Under Section 1.704-1
(b)(2)(iv)(f) of the Income Tax Regulations as determined by the approval of
both of the Members. Any action taken pursuant to this Section 1.2C shall
constitute a Unanimous Approval Major Decision as set forth in Section 5. IC of
the Agreement
D. Determination of Book Items. The book values of Company
---------------------------
Property shall be increased or decreased, as the case may be, to reflect any
adjustments to the adjusted tax basis of such properties pursuant to Section
734(b) or Section 743(b) of the Code to the extent that such basis adjustments
(i) are taken into account in determining Book Capital Account balances pursuant
to Section 1.704-1 (b)(2)(iv)(rn) of the Income Tax Regulations and (ii) have
not been reflected in adjustments to the book values of such properties pursuant
to Section 1.2C, If an item of Company Property has an adjusted tax basis equal
to zero, adjustment to the book value of such property shall be determined under
any reasonable method selected by Managing Member.
E. Book Adjustments on Distributions. With respect to all
---------------------------------
distributions of Company Property to the Members, the Company shall comply with
the provisions contained in Section 1-704-1(b)(2)(iv)(e) of the Income Tax
Regulations (relating to adjustments to the Members' Book Capital Accounts in
connection with such distributions) and all allocations and adjustments made in
connection therewith shall be in accordance with Article II of this Exhibit "C."
ARTICLE II ALLOCATION OF INCOME, LOSSES AND DEDUCTIONS FOR BOOK AND TAX
------------------------------------------------------------------------
PURPOSES
--------
Section 2. I. Profits and Losses The "Profits" or "Losses" of the Company
-------------------
(which are defined at the end of this Section 2. 1) for each fiscal year of the
Company, shall be allocated to' the Members in the following order and priority.
A. Profits. profit.-, shall be allocated among the Members as follows-
-------
(1) First, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Profits equal
to the excess, if any, of (x) the cumulative amount of Losses allocated to such
Member pursuant to Section 2. 1 B(4) hereof through and including such fiscal
year; over (y) the cumulative amount of Profits allocated to such Member
pursuant to this Section 2. IA(l) through and including such fiscal year;
C-2
<PAGE>
(2) next, to the Member receiving distributions pursuant to Section 4.3
of the Agreement until there shall have been allocated to such member cumulative
profits through and including such fiscal year equal to the, amount, if any, by
which: (X) the distributions made to such Member in accordance with such Section
4.3; exceed (y) A less B plus C where: A = the amount of the Discretionary
Capital Contributions, if any, made by such Member pursuant to Section 3.4 of
the Agreement- B = the cumulative amount of Losses allocated to such member's
pursuant to Section 2.113(3) through and including such fiscal year; and C = the
cumulative amount of Profits allocated to such Member pursuant to this Section
2. 1 A(2) through and including such fiscal year; and
(3) next, to the Members, in proportion to their respective Company
Percentages.
B. Losses. Losses shall be allocated among the Members as follows--
------
(1) First, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Losses equal
to the excess, if any, of (x) the cumulative amount of Profits allocated to such
Member pursuant to Section 2. 1 A(3) hereof through and including such fiscal
year-, and (y) the cumulative amount of Losses allocated to such Member pursuant
to this Section 2. 1 B(l) through and including such fiscal year;
(2) next, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Losses equal
to the excess, if any, of (x) an amount of Losses equal to such Member's Initial
Book Capital Account balance, as set forth in Section 1.2B of this Exhibit "C"
of - over (y) the Cumulative amount of Losses allocated to such Member pursuant
to this Section 2. I B(2), through and including such fiscal year;
(3) next, to the Members, in proportion to their relative Company
Percentages and then as appropriate,' Until there shall have been allocated to
each Member Losses equal to the excess, if any, of (x) an a-mount of
Discretionary Capital Contributions made by such Member pursuant to Section 3.4
of the Agreement-, over (y) the cumulative amount of Losses allocated to such
Member pursuant to this Section 2. 1 B(3), net of the cumulative amount of
Profits allocated to such Member pursuant to Section 2. 1 A(2) through and
including such fiscal year;
(4) next, to the Members, in proportion to their respective relative
Company Percentages.
For purposes of this Exhibit "C" and elsewhere in the Operating Agreement,
"Profit' (or "Loss') means, for each fiscal year of the Company, an amount, if
any,, by which the Company's gross taxable income and gains exceed (or are
exceeded by) the, Company's gross taxable
C-3
<PAGE>
deductions and losses arising in connection therewith, Calculations Of Profit
(and Loss) shall be consistent with calculations made for Federal income tax
purposes except that:
(i) income of the Company that is exempt from federal income tax and
that is not otherwise taken in account in computing Profit (or Loss) shall be
added to such taxable
income;
(ii) expenditures of the Company that are described in Section
70,5(a)(2)(IE3) f the Code- (or that are treated as described in such Section
pursuant to Section 1.704-1 (b)(2)(iv)(i) of the Income Tax Regulations) and
that arc not otherwise taken in account in computing Profit (or Loss) shall be
subtracted from such taxable income;
(iii) if the book-values of Company assets are adjusted pursuant to
Section 1,2, such adjustments shall be treated as gains or losses, as the case
may be, from dispositions of those assets in accordance with Section 1.704-
1(b)(2)(iv)(f) of the Income Tax Regulations;
(iv) gains, losses and cost recovery deductions With respect to
properties that are properly reflected, under section 704-1 (b)(2)(iv)(f) of the
Income Tax Regulations, on the Company' s books at values that differ from the
Company's tax bases in those Properties shall be determined with reference to
the book values of those properties in accordance with Sections 1.704-
1(b)(2)(iv)(f), 1,704-1(b)(2)(iv)(g) and 1,704-1(b)(4)(i) of the Income Tax
Regulations; and
(v) items that are specially allocated pursuant to Section 2.4 shall
not be taken into account in computing a Profit (or Loss) for any year or
other period.
Section 2.2. Tax Allocations.
---------------
A. Tax Allocations. Tax allocations for each fiscal year of the
---------------
Company shall be made consistent with the allocations of Profit and Loss and
items specially allocated pursuant to Section 2.4 for such fiscal year, except
that, solely for tax purposes, (i) items of income, gain, loss and deduction
with respect to Company assets reflected hereunder in the Members' Book Capital
Accounts and on the books of the Company at values that differ from the
Company's adjusted tax bases in such assets shall be allocated among the Members
so as to take account of those differences in such manner as the Managing Member
reasonably determines is in accordance with the "traditional method" provided
for in the Regulations under Section 704(C) of the Code and with Sections 1.704-
1 (b)(2)(iv)(f), 1.704- 1 (b)(2)(iv)(g), 1,704-1 (b)(4)(i) and 1.7043 of the
Income Tax Regulations, and (ii) adjustments made pursuant to Section 734(b) or
Section 743(b) of the Code shall be taken into account.
B. Recapture Income. If, in the event of a gain on any sale,
-----------------
exchange or other disposition of Company Property, all or a portion of such gain
is characterized as ordinary income by vixtue of the recapture rules of Section
1250, Section 1245 or otherwise, then such
C-4
<PAGE>
ordinary income shall be allocated between or among the Members in the same
manner that deductions from depreciation with respect to such Company Property
had open allocated between or among them; provided, however, that under no
circumstances shall there be allocated to any Member such ordinary income in
excess of the gain allocated to such Member under subsection A above and such
excess shall be allocated instead between or among the Members as to which this
proviso does not apply, in proportion to the gain allocated between or among
them). Consistent with the foregoing provisions of this Section 2.2.B, the
parties hereto intend that the allocation of income recharacterized pursuant to
the recapture rules of Section 1250.1, Section 1245, or otherwise, shall be
governed generally by Section 1. 1245-1 (e) of the proposed Income Tax
Regulations.
Section 2.3. Exceptions
----------
(1) General Limitation Notwithstanding anything to the contrary
------------------
contained in this Article 11, no allocation shall be made to a Member which
would cause such Member to have a deficit balance in its "adjusted Book Capital
Account" (defined as the Book Capital Account of a Member reduced by any
adjustments, Relocations or distributions described in Section 1.704-1
(b)(2)(ii)(d)(4), (5) or (6) of the Income Tax Regulations) which exceeds the
sum of such Member's share of Company "minimum gain" (as defined in Section
1.704-2(d) of the Income Tax Regulations) and such Member's share of Member
"nonrecourse debt minimum gain" (as defined in Section 1.704-2(i) of the Income
Tax Regulations). If the limitation contained in the preceding sentence would
apply to cause an item of loss or deduction to be unavailable for allocation to
all Members, then such item of loss or deduction shall be Allocated between or
among the Members in accordance with the Members' respective Company
Percentages.
(2) Allocation Relating to Nonrecourse Borrowing The Company (i)
--------------------------------------------
shall allocate any "nonrecourse deductions," computer and determined in
accordance with Section 1.704-2(b)(1), 1,704-2(c) and 1.704-2(j) of the Income
Tax Regulations, it may have to the Members in proportion to their respective
Company Percentages, (ii) shall allocate any "partner nonrecourse deductions,"
computed and determined in accordance with Sections 1.704-2(i) and 1.704-2(j) of
the Income Tax Regulations, it may have so as to comply with Section 1.704(i) of
the Income Tax Regulations and (iii), shall make such allocations as are
necessary to comply with the "minimum gain chargeback" provisions of Sections
1.704-2(f), 1.704-2(i) and 1.704-2(j) of the Income Tax Regulations, taking into
account all exceptions provided by such provisions to the applicability of this
clause (iii).
Section 2-4. Qualified Income Offset. Notwithstanding anything to the
-----------------------
contrary in this Exhibit "C," in the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Section 1.704-
1(b)(2)(ii)(d)(4), (5), or (6) of the Income Tax Regulations, there shall be
specially allocated to such Member such items of Company income and gain, at
such times and in such amounts as will eliminate as quickly as possible the
deficit balance (if any) in its Book Capital Account (in excess of the sum of
such Member's share of
C-5
<PAGE>
Member "Minimum gain" and such Member's share of "nonrecourse debt minimum
gain") created by such adjustments, allocations or distributions. To the extent
permitted by the Code and the Income Tax Regulations, any special allocations of
items of income or gain pursuant to this Section 2.4 shall be taken into account
in computing subsequent allocations of Profits or Losses pursuant to this
Article II, So that the net amount of any items so allocated and the subsequent
Profits or Losses allocated to the Members pursuant to this Article II shall, to
the extent possible, be equal to the net amounts that would have been allocated
to each such Member Pursuant to the provisions of this Article II if such
unexpected adjustments, allocations or distributions had not occurred.
Section 2.5. Member's Interests for Purposes of Section 752 The Members
-----------------------------------------------
agree and confirm that the provisions of Section 1.752-3 of the Income Tax
Regulations apply to all nonrecourse liability of the Company. As permitted by
Section 1.752-3(a)(3) of the Income Tax Regulations, the Members hereby specify
that for purposes of determining their respective shares of excess nonrecourse
liabilities of the Company, the Members' respective shares of Company profits
shall be equal to their respective Company Percentages,
ARCTICLE III TAX AND ACCOUNTING MATTERS
- ---------------------------------------
A. The Company will be on the cash basis for tax purposes and in
accordance with Generally Accepted Accounting Principles (as applied in the
United States) for accounting Purposes unless the Code requires -otherwise.
B. The Company books and records shall be prepared in
accordance with tax accounting principles, consistently applied. Such books and
records shall be audited by such certified public accountants as selected by the
Members, at least annually and at such other time as are determined by Members.
C. The fiscal year of the Company shall end on the 31st day of
December in each year.
D. Managing Member shall comply with the requirements contained in
Section 1446 of the Code and comparable tax laws of any other State in which
the Company is engaged in business (regarding income tax withholding on
certain income that is allocated to Members who are non-U.S. persons) and any
successor or replacement provision or provision of law or administrative
guidance (the "FOREIGN MEMBER WITHHOLDING LAW"). Managing Member is hereby
authorized and directed by each Member to withhold from the distributions or
other amounts payable to such Member under the Operating Agreement such amount
or amounts ("REQUIRED FOREIGN MEMBER WITHHOLDING") as the Managing Member
reasonably determines are required by the -Foreign Member Withholding Law, and
to remit the Required Foreign Member Withholding to the Internal Revenue
Service and/or such other applicable State taxing agency at such time or times
as may from time to time be required by the relevant taxing authority. If the
Managing Member determines at any time that the Required Foreign Member
C-6
<PAGE>
Withholding with respect to a particular Member exceeds the amount of
distributions or other amounts payable to such Member at such time (a "CASH
SHORTFALL'), the Member in question shall immediately make a cash contribution
to the Company equal to the amount Of such Cash Shortfall, which the Managing
Member shall use to effectuate the Required Foreign Member Withholding. When
remitting the Required Foreign Member Withholding, the Managing Member shall
inform the relevant taxing authority of the name and tax identification number
of the Member for whose account such Required Foreign Member Withholding's
being made. In complying with the provisions of this paragraph, the Managing
Member shall be entitled to presume irrebuttably that a Member is subject to the
Foreign Member Withholding Law unless: (i) such Member shall have previously
provided the Managing Member with a completed and signed certificate of -non-
foreign status, in the Form attached as Schedule such certificate was furnished
to the Managing Member not earlier than during the third taxable year of the
Company preceding the taxable year under consideration, the Managing Member has
not been notified by such partner that its status under such certificate has
changed, and the Managing Member does not have, actual knowledge that the status
of such Member under such certificate has changed; or (ii) the Managing Member
reasonably determines, based upon all facts and Circumstances (including without
limitation, the provisions contained in Revenue Procedure 8931, 1989-1 Cum.
Bull. 895, or any successor Revenue Procedure, guideline or administrative
pronouncement), that the Foreign Member Withholding Law does not apply in a
particular instance.
E. The Managing Member shall cause the Company to make, or not to
make, the election Permitted by Section 754 of the Code add comparable
provisions of relevant state income tax law, as it shall determine in its sole
discretion.
ARTICLE IV, NO DEFICIT FUNDING OBLIGATION
- -----------------------------------------
Notwithstanding anything to the contrary contained in this Exhibit "C" or
in the operating Agreement, no Member shall be at any time obligated to restore
all or any portion of a deficit balance in such Member's Book Capital Account.
ARTICLE V ORDER OF APPLICATION
- ------------------------------
For purposes of this Exhibit "C," the following provisions set forth in the
Operating Agreement and this Exhibit "C" shall be applied in the following
order.
A. Article IV of the operating Agreement relating to
distributions.
B. Section 2.3(l) of this Exhibit "C" relating to general
limitations,
C. Section 2-3(2) of this Exhibit "C" relating to Nonrecourse
Deductions
D. Section 2.4 of this Exhibit "C" relating to qualified income
offset.
C-7
<PAGE>
E. Section 2.1 of this Exhibit "C", relating to allocations of
Profits and Losses.
These provisions shall be applied as if all contributions, distributions
and allocations with respect to a given fiscal year were made at the end of the
Company's fiscal year. Where any provision depends on the Book Capital Account
of any Member, such Book Capital Account shall be determined after the
application of all preceding provisions for the year.
ARTICLE VI CLOSING OF COMPANY BOOKS IN CONNECTION WITH ADMISSION OF NEW MEMBER
- ------------------------------------------------------------------------------
OR TRANSFER OF MEMBER'S INTEREST.
- ---------------------------------
Upon the effective date (the "EFFECTIVE DATE") of the admission of a new
Member into the Company or of a valid transfer of all or part of a Member's
interest in the Company pursuant to Article VI of the, Operating Agreement, the
books of the Company shall be closed in accordance with Section 706(d) of the
Code, and consistent therewith: (X) items of income, deduction, gain, loss and
or credit of the Company that are recognized prior to the Effective Date shall
be allocated among those persons or entities who were Members in the Company
prior to the Effective Date- and (Y) items of income, deduction, gain, loss
and/or credit of the Company that are recognized after the Effective Date shall
be allocated among the persons or entities who were Members after the Effective
Date.
ARTICLE VII TAX MATTERS PARTNER
- -------------------------------
Managing Member shall be the "tax matters partner" of the Company as such
term is defined in Section 6231(a)(7) of Code (the "Tax Matters Partner"), and
it shall serve as such at the expense of the Company with all powers granted to
a tax matters partner under the Code. Managing Member shall use its best
efforts to cause the Company's accountants to prepare and file on a timely
basis, with due regard to extensions, all tax and information returns that the
Company may be required to file, all at Company expense. The Company's
accountants are (i) to deliver all tax and information returns to the Members
for their review, comment and reasonable approval at least thirty (30) days in
advance of the required filing date, therefor (taking into account any
extensions approved by the Members), and (ii) to furnish the Members with a
projection of the Company's taxable income or loss for each fiscal and tax year
of the Company by December 1 of each such year to assist in year-end tax
planning, all at Company expense. Each Member shall give prompt notice to each
other Member of any and all notices it receives from the Internal Revenue
Service concerning the Company, including any notice of audit, any notice of
action with respect to a revenue agent's report, any notice of a thirty (30)
day appeal letter and any notice of a deficiency in tax concerning the Company's
federal income tax return. The Tax Matters Member shall at Company expense
finish each Member with status reports regarding any negotiation between the
Internal Revenue Service and the Company, and each such Member, if it's
requests, may participate in such negotiation. The Tax Matters Member shall
use its best efforts to cause the Company's accountants to prepare and deliver
to each
C-8
<PAGE>
Member an information reporting return (Schedule K-1) reflecting each Member's
distributive share of all income, gain, loss, deductions, allowances or credits
of the Company for each fiscal year, and will provide the information necessary
for such accountants to do so and to issue the other reports required hereunder
on a timely basis.
ARTICLE VIII OUTSIDE ACCOUNTANT
- -------------------------------
The Members hereby approve, but the Managing Member shall not be required to
use, Deloitte & Touche, LLP as outside accountant for the Company.
C-9
<PAGE>
SCHEDULE "1" TO EXHIBIT "C"
---------------------------
[INDIVIDUAL]
CERTIFICATION OF NON-FOREIGN STATUS
-----------------------------------
Section 1446 of the Internal 'Revenue Code provides that a company must pay
a withholding tax to the Internal Revenue Service with respect to A member's
allocable share of the company's effectively connected taxable income. To
inform Copley Place Associates, LLC (the "COMPANY") that the provisions of
Section 1446 do not apply, I ______________ hereby certify the following:
1. I am not a nonresident alien for purposes of U-S. Income,
taxation.
2. My U.S. taxpayer identification number (social security
number) is
3. My home address is:
I hereby agree that if I become a nonresident alien, I will notify the
Company Within. sixty (60) days of doing so. I understand that this
certification may be disclosed to the Internal Revenue Service by the Company
and that any false statement contained herein could be punished by fine,
imprisonment, or both,
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
Executed as of the day of , 19 , at .
---------- -------------- -- ----------
-------------------------------
C-10
<PAGE>
OVERSEAS PARTNERS CAPITAL CORP.
CERTIFICATION OF FOREIGN STATUS.
-------------------------------
Section 1446 of the Internal Revenue Code provides that a company Must pay
a withholding tax to the Internal Revenue Service with respect to a member's
allocable share of the company's effectively connected taxable income. To inform
Copley Place Associates, LLC (the "Company") that the provisions of Section 1446
do not apply, the undersigned hereby certifies on behalf of the following.-
1. Overseas Partners Capital Corp. is not a foreign corporation,
foreign company, foreign trust, or foreign estate (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations);
2. Overseas Partners Capital Corp.'s U.S. taxpayer identification
number is
- -----------------------
3. Overseas Partners Capital Corp.'s office address is:
Overseas Partners Capital Corp.
115 Perimeter Center Place, Suite 940
Atlanta, Georgia 30346-1223
Overseas Partners Capital Corp. hereby agrees to notify the Company within
sixty (60) - days of the date Overseas Partners Capital Corp. becomes a foreign
person. Overseas Partners Capital Corp. understands that this certification may
be disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of Overseas Partners Capital Corp.
Executed as of the day of , 19 , at .
----------- -- --- ------------
--------------------------
Bruce M. Barone
President
C-11
<PAGE>
EXHIBIT "D"
-----------
PROCEDURE FOR DERTERMINIG FMV
-----------------------------
The following provisions set forth the procedure for determining "Fair
Market Value' as referred to in Section 8.2 of the Amended and Restated Limited
Liability Company Agreement (this "Agreement") to which this Exhibit is attached
and of which this Exhibit is a part. Except as otherwise indicated, each
capitalized term used herein shall have the meaning set forth for the same
elsewhere in the Agreement.
A. Definition. "Fair Market Value" means the price (as
----------
determined pursuant to this Exhibit) at which the property (the "SUBJECT
PROPERTY") to be appraised would be sold for cash by a willing seller, not
compelled to sell, to a willing buyer, not compelled to buy, on a free and
clear basis, unencumbered by any financing (including, without limitation, any
deeds of trust, mortgages, ground leases (in connection with sale/leaseback
financing only) or other security instruments securing any financing) other
than prepayment penalties except to the extent such penalties are applicable to
the transaction giving rise to the need to determine Fair Market Value.
However, the determination of the Fair Market Value of the Subject Property
shall take into account (and be reduced by) the total closing costs (including
attorneys' fees, title insurance costs, brokers' fees and recordation costs)
that would customarily be paid by the seller of properties of like kind and
stature.
B. Agreement Procedure. First, the parties shall attempt to
-------------------
determine the Fair Market Value of the Subject Property by agreement in
accordance with this subsection B.
(1) Proposal. On (or within 15 days before or after) the date (the
--------
"DETERMINATION DATE") as of which the determination of Fair Market Value is to
be made, the Electing Member ("FIRST MEMBER") (upon agreement of all parties
comprising First Member) may give the Dissolution Member ("SECOND MEMBER")
written notice of its proposed Fair Market Value of the Subject Property. If
Second Member disagrees with any such proposed Fair Market Value, Second Member
shall notify First Member in writing, within 10 business days after First
Member's proposal is delivered, of its disagreement and its counterproposal (and
failure to do so within such 10 business day period shall be deemed to
constitute Second Member's agreement with First Member's proposal). Such 10
business day period is herein called the "Proposal Period."
(2) Supplemental Discussion. If First Member and Second Member
-----------------------
fail to reach actual (or deemed) agreement during the Proposal Period (or if the
proposal described above is not given), then the parties shall use good faith
efforts to reach agreement on the Fair Market Value, of the Subject Property on
or before the "OUTSIDE NEGOTIATION DATE" (which, as used herein, means the date
that is 20 business days after the Determination Date or, if later, 10 business
days after the Proposal Period, if any).
D-1
<PAGE>
C. Appraisal Procedure. If agreement is not reached (or deemed
--------------------
reached) on or before the Outside Negotiation Date, then the Fair Market Value
of the Subject Property shall be determined by an appraisal made by a single
appraiser or by a board of three appraisers as hereinafter provided in this
subsection C.
(1) Appointment of Appraisers.
(a) Appraiser qualifications. Each appraiser selected
------------------------
under this Exhibit must (i) be a reputable real estate appraiser, (ii) be a
member of the American Institute of Real Estate Appraisers or a successor body
hereinafter constituted exercising a similar function, (iii) have at least five
(5) years experience in appraising major institutions quality properties,' and
(iv) have no direct or indirect financial or other business interests in or with
any party to this Agreement,
(b) Selection Process During the 15-day period
-----------------
immediately following the Outside Negotiation Date, the parties will endeavor
jointly to select, approve and appoint an appraiser to appraise the Subject
Property for the purposes of this Exhibit. If the parties have not jointly
appointed an appraiser by the date which is 15 days after the Outside
Negotiation Date, the appraisal of the Subject Property for the purposes of this
Exhibit will be conducted by a board of three appraisers, one appointed by First
Member, one appointed by Second Member and the third appointed by the first two
appraisers, In the event that the Parties have not jointly appointed an
appraiser by the date which is 15 days after the Outside Negotiation Date, the
first two appraisers shall be appointed by the parties by a date which is not
later than 30 days after the Outside Negotiation Date, and the third appraiser
shall be appointed by the first two appraisers within 15 days after the
appointment of the first two appraisers- If the first two appraisers are unable
to agree on a third appraiser, such third appraiser shall be appointed by the
senior federal district court judge, or such other federal district court judge
as he may designate, for the district in which the Subject Property is located.,
acting in his non-judicial capacity. If such federal district court judge
refuses to act within 15 days after such request, such third appraiser shall be
appointed pursuant to the rules of the American Arbitration Association. If the
parties have not jointly appointed an appraiser by the date which is 15 days
after the Outside Negotiation Date, and one Member appoints an appraiser within
the time period specified above and the other Member fails to appoint another
negotiator within the time period specified above the appraiser shall be the
appraiser appointed by the first party.
(C) Costs. The costs and expenses of each of the first two appraisers
-----
shall be paid by the party appointing such appraiser, and the costs and expenses
of the third appraiser (or the single appraiser, if one appraiser, instead of
three appraisers, is used) shall be shared 50% by the First Member and 50% by
the Second Member.
D-2
<PAGE>
(2) DETERMINATION BY APPRAISERS.
---------------------------
(a) Appraisal by One Appraiser. If the appraisal
--------------------------
is, to be conducted by a single appraiser appointed jointly by the parties, the
appraiser appointed shall proceed to appraise the Subject Property and notify
the parties by written notice of the amount of the Fair Market Value of the
Subject Property, which notice shall be accompanied by a copy of his appraisal
report, not later than the earlier to occur of the date which is 30 days after
the appointment of such appraiser and the date which is 45 days after the
Outside Negotiation Date, and such appraiser's determination of the Fair Market
Value of the Subject Property shall be deemed to be the Fair Market Value of the
Subject Property.
(b) Appraisal by Three Appraisers. If the
-----------------------------
appraisal is to be conducted by a board of three appraisers, the appraisers
shall proceed to appraise the Subject Property and notify the parties by written
notice of the amount of their determinations of the Fair Market Value of the
Subject Property, which notices shall be accompanied by copies of their
appraisal reports and be given not later than 30 days after the appointment of
the third appraiser. If the determinations of the Fair Market Value of the
Subject Property of any two or all three of the appraisers shall be identical in
amount, such amount shall be deemed to be the Fair Market Value of the Subject
Property, but if such determinations of all three appraisers shall be different
in amount, then the Fair Market Value of the Subject Property shall be
determined as follows:
(i) If neither the highest nor the lowest appraised
value differs from the middle appraised value by more than 10% of the middle
appraised value or if highest and lowest appraised values each differ from the
middle appraised value by the same amount, then the Fair Market Value of the
Subject Property shall be deemed to be the average of the three appraised
values; and
(ii) Otherwise, the Fair Market Value of the Subject
Property shall be deemed to be the average of the middle appraised value and the
appraised value closer in amount to the middle appraised value.
D. Conclusive Determination. The Fair Market Value of the Subject
------------------------
Property determined in accordance with the provisions of this Exhibit shall be
binding and conclusive on the parties.
D-3
<PAGE>
EXHIBIT "E"
-----------
PROVISIONS CONCERNING EXISTING LOAN
-----------------------------------
Capitalized terms used but not otherwise defined in this Exhibit -"E" shall
have the meanings ascribed thereto in the Amended and Restated Limited Liability
Company Agreement (the "Agreement") to which this Exhibit E is attached.
1. Loan Escrow Account The Managing Member shall cause the Company to
-------------------
make, as and when required by the Existing Loan Documents, all deposits into
that certain interest bearing account (the "Loan Escrow Account") established
under the "Security Agreement" (as defined below) and defined therein as the
"Account" (any such deposit being referred to as a "Loan Escrow Deposit",.
whether such deposit increases the balance of the Loan Escrow Account or is used
and applied to principal or deferred interest). The parties also acknowledge
that the calculation of the Loan Escrow Deposit is impacted by the fact that
fees payable with respect to the Management Agreement (some of which arc in turn
used to paY fees owing under the Purchase Service Agreement) are not to be paid
out of cash flow, thereby increasing the cash flow available to be applied to
the Loan Escrow Account.
2. Contributions for Management Fees, To the extent that, prior to the
----------------------------------
refinancing of the Existing Loan, the compensation and reimbursements to Manager
provided in the Management Agreement or to the Purchased Services Provider under
the Purchased Services Agreement cannot be paid from cash flow from the property
securing the Existing Loan on account of restrictions in the Existing Loan
Documents, Non-Managing Member shall provide the funds to the Company in order
to make such payment. Such funds shall be deemed to be (i) a contribution (as
to one-third of such funds) by the Non-Managing Member to the Company, and (ii)
a loan (as to two-thirds of such funds) from the Non-Managing Member to the
Managing Member and the making by the Managing Member of a corresponding
contribution to the Company.
3. Loan to Non-Managing Member of 2/3rds of Debt Service Differential.
------------------------------------------------------------------
As used herein, "Debt Service Differential" means the amount, if any, by which
the Escrow Deposits and payments of interest to the existing Lender are greater
than the sum of (1) 8.5% per annum of the outstanding balance of principal and
deferred interest on the Existing Loan on January 1, 1997 plus (ii) the amount
paid to Manager and to Purchased Services Provider from the contributions of the
Members described in paragraph 2 above. Immediately following each Escrow
Deposit (commencing with the first Escrow Deposit for the period after December
31, 1996), and continuing until the refinancing of the Existing Loan, Non-
Managing Member shall lend the Managing Member two-thirds of the amount of the
Debt Service Differential for the period since the most recent prior Escrow
Deposit.
4. Repayment of Loans Concurrently with the refinancing of the Existing
------------------
Loan, Managing Member shall repay to Non-Managing Member the entire amount of
the loans to
E-1
<PAGE>
Managing Member made pursuant to paragraph 2 and 3 of this Exhibit ""E",
together with interest thereon of 8.5% per annum of the amount of the principal
outstanding from time to time of such loans. Notwithstanding the foregoing, to
the extent the Loan Escrow Deposits which correspond to the loans to Managing
Member made pursuant to paragraphs 2 and 3 of this Exhibit "E" are simply used
to increase the balance of the Loan Escrow Account instead of being applied to
principal or deferred interest under the Existing Loan, the interest applicable
to, such portion of the loans to Managing Partner shall be the same interest
rate earned on funds in the Loan Escrow Account.
5. Certain Definition '. As used herein, the term "Security Agreement"
------------------
means that certain Security Agreement (Deposit Account), dated as of March 1,
1992, executed by Copley Place Associates, Copley Place Associates Nominee
Corporation, Copley Funding Corporation, Copley Financing Corporation and The
Aetna Casualty & Surety Company.
6. Consignment Equity- All sums, if any, that are to be paid to
--------------------
Existing Lender with respect to the Existing Lender's rights in "Contingent
Equity" (as defined in the Equity Payment Agreement) shall be paid solely by the
Non Managing Member, and Non-Managing Member shall indemnify the Managing Member
and hold the Managing Member harmless therefrom.
7. Intent of Provisions. It is the intent of the provisions of
--------------------
paragraphs 1 through 6 above that Managing Member be put in the same economic
position as it would have been if, at all times from the inception of its
Memberships in the Company through the date of repayment (or prepayment) of the
Existing Loan in its entirety, the Escrow Loan Documents (i) did not require
additional payments to be made to the Loan Escrow Account, (ii) did not require
payment of Contingent Equity, (iii) did not prohibit payments from cash flow to
pay amounts payable under the Management Agreement and the Purchased Services
Agreement and (iv) did require that payments be made each month on the Existing
Loan equal to interest accruing at 8.5% per annum on the outstanding. balance,
as of date of Managing Member's admission to the Company, of principal and
deferred interest on the Existing Loan (and that, accordingly, the balance of
principal and deferred interest on the Existing Loan did not decrease between
Managing Member's admission to the Company and the date on which the Existing
Loan is repaid (or prepaid) in its entirety). The provisions of paragraphs I
through 6 above shall be deemed to operate, and shall be construed in accordance
with, such intent.
8. Assignment and Security Agreement. Each Member, other than Copley or
---------------------------------
any successor Independent Member ("Pledging Member"), hereby pledges to the
other Member, and assigns to the other Member ("Secured Member") for security
purposes, all of the, Pledging Member's interest in the Company to secure the
payment obligations of the Pledging Member under the provisions of this Exhibit
"E," and agrees to execute and deliver any and all further instruments as the
Secured Member may from time to time request in order to further evidence or to
perfect the security interest hereby granted, hereby irrevocably appointing the
Secured Member and its successors as its attorney-in-fact, as a power coupled
with an interest, to execute and deliver all such instruments in the name and on
behalf of the Pledging Member if it shall fail
E-2
<PAGE>
to promptly execute and deliver same when requested to do so. The Secured
Member hereby authorizes the Pledging Member to receive distributions with
respect to its Interest in the Company until such time as the Pledging Member
shall fail to pay any amount to the Secured Member which becomes due under this
Exhibit "E". whereupon all such distributions shall be paid directly to the
Secured Member until the delinquent amounts have been paid in full together with
interest at the Applicable Rate (as defined in Section 3-3); provided that
notwithstanding anything to the contrary in this Exhibit E, (i) no Member of the
Company will pledge any of the assets of the Company, (ii) Copley or any
successor Independent Member shall not pledge its ownership interest in the
Company to any of the other Members or any other entity, and (ill) the Company
shall at all times have at least two members, one of which shall be the
Independent Member, which is currently Copley.
201093-3
E-3
<PAGE>
Exhibit 10 (zzz)
<PAGE>
NOTICE OF DIRECT LEASE
NOTICE is given this 30th day of July, 1997, by COPLEY PLACE
ASSOCIATES, LLC, a Delaware limited liability company (hereinafter called
"Copley"), to URBAN INVESTMENT AND DEVELOPMENT CO., a partnership duly organized
and existing under the laws of the State of Illinois and having a usual place of
business in Chicago, Illinois (hereinafter called "UIDC") and MASSACHUSETTS
TURNPIKE AUTHORITY, a body politic and corporate, organized under the laws of
the Commonwealth of Massachusetts (hereinafter called the "MTA"), acting herein
on behalf of itself and the Commonwealth of Massachusetts, as follows:
Reference is made to that certain lease dated as of December 22, 1978
by and between the MTA and Urban Investment and Development Co., a Delaware
corporation ("Urban") UIDC's predecessor in interest, amended and restated as of
January 31, 1980, and modified by Technical Memorandum dated November 12, 1980,
Amendment to Technical Memorandum dated December 15, 1980, Second Amendment to
Technical Memorandum dated May 18, 1981, and Third Amendment to Technical
Memorandum dated February 21, 1990 (the "Master Lease"), notice of which lease
is recorded with the Suffolk Registry of Deeds in Book 9804, Page 1, and filed
with the Suffolk Registry District of the Land Court as Document No. 356809 as
amended by Amended Notice of Lease recorded with the Suffolk Registry of Deeds
in Book 16150, Page 072, whereby the MTA leased to Urban certain property in the
City of Boston, Massachusetts described in Schedule A of the Master lease (the
"Master Lease Premises") which Lease was assigned by Urban to UIDC by that
Certain Instrument of Transfer dated as of December 24, 1986, recorded in the
Suffolk Registry of Deeds in Book 16150, Page 053 and filed with the Suffolk
Registry of the Land Court as Document Number 462741.
Reference is also made to a Sublease dated August 31, 1982, by and
between Urban and UIDC of Massachusetts, Inc. ("UIDC-MA") (hereinafter call the
"Central Area Lease"), notice of which is recorded in the Suffolk Registry of
Deeds in Book 10056, Page 233, covering a portion of the Master Lease Premises
which is described in Schedule A of said notice and in Exhibit "A" annexed
-----------
hereto and the rights and easements described in the Central Area Lease (the
"Central Area Premises") for a term commencing on August 31, 1982 and expiring
on December 13, 2077, unless sooner terminated as therein provided, which Lease
has been assigned by UIDC-MA to Urban by Assignment of Tenant's Interest in
Sublease dated September 1, 1983, recorded in the Suffolk Registry of Deeds in
Book 10592, Page 216, and further assigned by Urban to Carlyle Real Estate
Limited Partnership, XIIII ("Carlyle") by Assignment of Tenant's Interest in
Sublease dated September 1, 1983, recorded in the Suffolk Registry of Deeds in
Book 10592, Page 225, and further assigned by Carlyle to Copley Place
Associates, an Illinois general partnership ("CPA") by Assignment of Tenant's
Interest in Sublease dated September 1, 1983, recorded in the Suffolk Registry
of Deeds in Book 10592, 'Page 235, as further assigned by Urban to CPA by
Assignment of Tenant's Interest in Sublease dated September 1, 1983, recorded in
the Suffolk Registry of Deeds in Book 10592, Page 246 as amended by First
Amendment of Central Area Air Rights
<PAGE>
Sublease dated March 21, 1985, by and between Urban and UIDC-MA, recorded in the
Suffolk Registry of Deeds in Book 11479, Page 339, and as further assigned by
Assignment of Tenant's Interest in Sublease dated July 18, 1989, by CPA to
Copley Place Associates Nominee Corporation, a Delaware corporation ("Nominee"),
recorded in the Suffolk Registry of Deeds in Book 15873, Page 232, the tenant's
interest in which Central Area Lease is now held by Copley [as successor by
merger to Nominee by Certificate of Merger dated July 24, 1997 and filed in the
office of the Register of Deeds prior hereto.
Reference is also made to a Non-Disturbance, Recognition and Direct
Leasing Agreement dated as of August 31, 1982, by and among the MTA, Urban and
UIDC-MA (the "Direct Leasing Agreement"), recorded with said Deeds in Book
10056, Page 242, whereby, inter alia, the MTA agreed to recognize Copley, upon
proper notice from Copley, as a direct tenant of the Central Area Premises with
the MTA, as landlord, under and pursuant to the terms of the Central Area Lease.
WHEREAS, pursuant to Section 6 of the Direct Leasing Agreement Copley
has the right to constitute the Central Area Lease as a direct lease between the
MTA, as landlord and Copley, as tenant;
WHEREAS, Copley intends hereby to so exercise its right to constitute
the Central Area Lease as a direct lease between the MTA and Copley; and
WHEREAS, the substantial completion of the improvements contemplated
by the Master Lease for the Central Area Premises has occurred.
NOW THEREFORE, Copley hereby notifies the MTA and UIDC of the exercise
of its right pursuant to Section 6 of the Direct Leasing Agreement to constitute
the Central Area Lease as a direct lease between the MTA and Copley from and
after the date hereof, and in connection therewith, further notifies the MTA and
UIDC of the following:
1. CREATION OF A DIRECT LEASE
BETWEEN THE MTA AND COPLEY
--------------------------
(a) Pursuant to Section 6 of the Direct Leasing Agreement, Copley
hereby notifies the MTA and UIDC that, from and after the date hereof (the
"Effective Date"), Copley will attorn to, accept and recognize the MTA as
Landlord under the Central Area Lease, on all of the same terms, provisions,
covenants and agreements now contained in the Central Area Lease.
(b) Pursuant to Section 6 of the Direct Leasing Agreement, from
and after the Effective Date, the MTA shall recognize and accept Copley as its
direct tenant under and pursuant to the terms of the Central Area Lease.
(c) By executing this Notice, UIDC, as tenant under the Master
Lease and as landlord under the Central Area Lease, acknowledges receipt of
this Notice from Copley to the MTA, and hereby assigns to the MTA its entire
interest as landlord in the Central Area
-2-
<PAGE>
Lease, without further consideration from any party, so as to effect a merger in
the MTA of the entire landlord's interest in the Central Area Premises from and
after the Effective Date. From and after the Effective Date, UIDC and its
successors and assigns are relieved of all liability and obligations which
accrue after the Effective Date (i) under the Master Lease to the extent they
relate to the Central Area Premises, and all such liabilities and obligations
shall be deemed deleted from the Master Lease, and (ii) under the Central Area
Lease.
(d) By executing this Notice, Metropolitan Life Insurance Company, the
mortgagee under the existing first leasehold mortgage (the "Mortgage") on the
Master Lease and the Central Area Lease, consents to the Central Area Lease
becoming a direct lease between the MTA and Copley for the Central Areas
Premises, pursuant to the terms hereof and the Direct leasing Agreement. The
continuance in effect of the Central Area Lease as a direct lease as described
above shall not alter or affect the continuance in effect or the priority of the
lien of the Mortgage on the Central Area Lease and the tenant's interest in the
Central Area Lease and the Mortgage shall continue to constitute a lien on the
Central Area Lease and the tenant's interest therein, with this same priority.
2. CONTINUATION OF SPACE LEASES:
-----------------------------
Copley and UIDC confirm that, pursuant to the Direct Leasing
Agreement, except to the extent expressly provided to the contrary in any
sublease of space in the Central Area Premises (a "Central Area Space Lease")
entered into by Copley, as landlord, the constitution of the Central Area Lease
as a direct lease pursuant hereto, does not and shall not terminate any Central
Area Space Lease or affect or diminish the rights of any tenant under any
Central Area Space Lease. The foregoing shall not affect the priority of the
lien of the Mortgage on the Central Area Lease and the tenant's interest
thereunder.
3. LIMITATION ON MTA'S OBLIGATIONS:
--------------------------------
Pursuant to Section 8 of the Direct Leasing Agreement, Copley and UIDC
acknowledge that (a) the MTA shall have no liability or responsibility for any
default or failure to perform by any prior Landlord pursuant to the Central Area
Lease or on account of any obligations of Landlord pursuant to the Central Area
Lease which have accrued prior to the Effective Date, and (b) the Central Area
Lease shall not be deemed to include any amendments or modifications made after
the date of the Direct Leasing Agreement which were not or are not approved in
writing by the MTA either before or after it becomes the Landlord under the
Central Area Lease.
4. SUCCESSORS AND ASSIGNS:
-----------------------
Pursuant to the Direct Leasing Agreement, this Notice is binding upon
and shall inure to the benefit of the undersigned and the MTA and their
respective successors and assigns to the landlord's or the tenant's interest in
the Master Lease or the Central Area Lease, as the case may be.
-3-
<PAGE>
5. TITLES NOT DEFINITIVE:
----------------------
The titles of Paragraphs in this Notice are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope or intent of this Notice.
6. GIVING OF NOTICE:
-----------------
From and after the Effective Date, every notice required or permitted
to be given to Copley as tenant under the Central Area Lease are to be addressed
as follows:
COPLEY PLACE ASSOCIATES, LLC
c/o Overseas Partners Capital Corp., General Partner
115 Perimeter Center Place
Suite 940
Atlanta, Ga. 30346
Attn: Thomas E. Butler
with a copy to:
Urban Investment and Development Co.
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60671
Attn: General Counsel
7. AUTHORITY:
----------
Each party hereto represents that (a) it has the necessary power and
authority to execute this instrument, and (b) this instrument constitutes the
binding and valid obligation of such party and is enforceable against such party
in accordance with its terms.
8. COUNTERPARTS:
-------------
This Certificate may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Notice under
seal, all as of the day and year first above written. This instrument may be
executed in counterparts.
COPLEY PLACE ASSOCIATES, LLC
By: Overseas Partners Capital Corp.,
its managing member
By: /s/ Bruce M. Barone
Name: Bruce M. Barone
Title: President & CEO
Accepted and Agreed:
URBAN INVESTMENT AND DEVELOPEMENT CO.
By: JMB Realty Corporation
its managing general partner
By: /s/ Elizabeth Kogen
Name: Elizabeth Kogen
Title: Vice President
METROPOLITAN LIFE INSURANCE COMPANY
(as to consent under Paragraph 1(d) only)
By: /s/ Mitchell E. Ryan
<PAGE>
STATE OF Georgia )
) SS:
COUNTY OF Dekalb ) July 30, 1997
Then personally appeared before me, the above name Bruce M. Barone,
-----------------
President of Overseas Partners Capital Corp., a Delaware corporation, Manager
- ---------
of Copley Place Associates, LLC, a Delaware limited liability company, who
executed the foregoing instrument and acknowledged that he executed the
foregoing instrument as the free act and deed of said corporation in its
capacity as Manager of said limited liability company pursuant to proper
authorization of the members of such limited liability company, and as the free
act and deed said limited liability company.
/s/ Elise R. Kitchens
Notary Public
My Commission Expires: 12/12/2000
STATE OF )
) SS:
COUNTY OF ) July , 1997
Then personally appeared before me, the above named _________________,
of JMB Realty Corporation, a Delaware corporation, Manager of Copley Place
Associates, LLC, a Delaware limited liability company, who executed the
foregoing instrument and acknowledged that he executed the foregoing instrument
as the free act and deed of said corporation in its capacity as managing member
of said limited liability company pursuant to proper authorization of the
members of such limited liability company, and as the free act and deed of said
limited liability company.
---------------------------
Notary Public
My Commission Expires:
<PAGE>
STATE OF NEW YORK
)SS.
COUNTY OF NEW YORK July 30, 1997
Then personally appeared the above-named Mitchell Ryan, Assistant Vice President
of Metropolitan Life Insurance Company, who executed the foregoing instrument
and acknowledged that he executed the foregoing instrument as the free act and
deed of said company.
/S/ Lily H. Lee
Notary Public
My commission expires June 13, 1998
LILY H.LEE
Notary Public, State of New York
No. 30-4934013
Qualified in Nassau County
Certificate Filed in New York County
Commission Expires June 13, 1998
<PAGE>
STATE OF NEW YORK
)SS.
COUNTY OF NEW YORK July 30, 1997
Then personally appeared before me the above named Elizabeth Kogen, Vice
President of JMB Realty Corporation, general partner of Urban Investment &
Development Co., an Illinois general partnership, who executed the foregoing
instrument and acknowledged that he executed the foregoing instrument as the
free act and deed of said corporation in its capacity as general partner of said
partnership pursuant to proper authorization of the partners of said
partnership, and as the free act and deed of such partnership.
/S/ Lily H. Lee
Notary Public
My commission expires June 13, 1998
LILY H.LEE
Notary Public, State of New York
No. 30-4934013
Qualified in Nassau County
Certificate Filed in New York County
Commission Expires June 13, 1998
<PAGE>
EXHIBIT "A"
------------
LEGAL DESCRIPTION OF CENTRAL AREA PREMISES
-9-
<PAGE>
Exhibit 10 (aaaa)
<PAGE>
CONFIRMATION OF DIRECT LEASE
AND LEASEHOLD MORTGAGE
THIS CONFIRMATION OF DIRECT LEASE AND LEASEHOLD MORTGAGE (this
"Confirmation") is made as of the 30th day of July, 1997, by COPLEY PLACE
ASSOCIATES, LLC, a Delaware limited liability company having its principal place
of business c/o Overseas Partners Capital Corp., 115 Perimeter Center Place,
Suite 940, Atlanta, Georgia 30346 ("Copley"), URBAN INVESTMENT AND DEVELOPMENT
CO., an Illinois general partnership, having its principal place of business at
900 North Michigan Avenue, Chicago, Illinois 60611("UIDC"), and METROPOLITAN
LIFE INSURANCE COMPANY, a New York corporation, having its principal place of
business at One Madison Avenue, New York, New York 10010 ("Mortgagee").
WHEREAS, by Lease dated as of December 22, 1978, by and between the
Massachusetts Turnpike Authority (the "MTA") and Urban Investment and
Development Co., a Delaware corporation ("Urban") UIDC's predecessor in
interest, which lease was amended and restated as of January 31, 1980, and
modified by Technical Memorandum dated November 12, 1980, Amendment to Technical
Memorandum dated December 15, 1980, Second Amendment to Technical Memorandum
dated May 18, 1981, and Third Amendment to Technical Memorandum dated February
21, 1990 (the "Master Lease"), notice of which lease is recorded with the
Suffolk Registry of Deeds in Book 9804, Page 1, and filed with the Suffolk
Registry District of the Land Court as Document No. 356809 as amended by Amended
Notice of Lease recorded with the Suffolk Registry of Deeds in Book 16150, Page
072, the MTA leased to UIDC certain property in the City of Boston,
Massachusetts described in Schedule A of the Master Lease (the "Master Lease
Premises"); and
WHEREAS, the tenant's interest in and to the Master Lease is now held
by UIDC, pursuant to that certain Instrument of Transfer dated as of December
24, 1986, recorded in the Suffolk Registry of Deeds in Book 16150, Pg. 53 and
filed with the Suffolk Registry of the Land Court as Document Number 462741; and
WHEREAS, by Sublease dated August 31, 1982 (hereinafter called the
"Central Area Lease"), Urban subleased to UIDC of Massachusetts, Inc. ("UIDC-
MA") a portion of the Master Lease Premises which is described in Schedule A of
said notice, and in Exhibit "A" annexed hereto and the rights and easements
-------
described in the Central Area Lease (the "Central Area Premises") for a term
commencing on August 31, 1982 and expiring on December 13, 2077, unless sooner
terminated as therein provided, notice of which Central Area Lease is recorded
in the Suffolk Registry of Deeds in Book 10056, Page 233, which Central Area
Lease has been assigned by UIDC-MA to Urban by Assignment of Tenant's Interest
in Sublease dated September 1, 1983, recorded in the Suffolk Registry of Deeds
in Book 10592, Page 216, and further assigned by Urban to Carlyle Real Estate
Limited Partnership, XIII ("Carlyle") by Assignment of Tenant's Interest in
Sublease dated September 1, 1983, recorded in the Suffolk Registry of Deeds in
Book 10592, Page 225, and further assigned by Carlyle to Copley Place
Associates, an Illinois general partnership ("CPA") by
<PAGE>
Assignment of Tenant's Interest in Sublease dated September 1, 1983, recorded in
the Suffolk Registry of Deeds in Book 10592, Page 235, as further assigned by
Urban to CPA by Assignment of Tenant's Interest in Sublease dated September 1,
1983, recorded in the Suffolk Registry of Deeds in Book 10592, Page 246, as
amended by First Amendment of Central Area Air Rights Sublease dated March 21,
1985, by and between Urban, and UIDC-MA, recorded in the Suffolk Registry of
Deeds in Book 11479, Page 339, and as further assigned by Assignment of Tenant's
Interest in Sublease dated July 18, 1989, by CPA to Copley Place Associates
Nominee Corporation, a Delaware corporation ("Nominee"), recorded in the Suffolk
Registry of Deeds in Book 15873, Page 232; and
WHEREAS, the tenant's interest in the Central Area Lease is now held
by Copley, as successor by merger to Nominee by Certificate of Merger dated July
24, 1997 and to be filed in the office of the Suffolk County Registry of Deeds
prior hereto; and
WHEREAS, by Non-Disturbance, Recognition and Direct Leasing Agreement
dated as of August 31, 1982, by and among the Authority, Urban and UIDC-MA (the
"Direct Leasing Agreement"), recorded with said Registry of Deeds in Book 10056,
Page 242, the MTA agreed, inter alia, to recognize Copley, upon proper notice
from Copley, as a direct tenant of the Central Area Premises under and pursuant
to the terms of the Central Area Lease; and
WHEREAS, Mortgagee has made a loan to Copley and UIDC in the amount of
$195,000,000 (the "Loan"), which Loan is secured by, among other things, a
leasehold mortgage, security agreement and fixture financing statement dated as
of the date hereof and recorded immediately prior to the recording of the Notice
(as hereinafter defined) in said Registry of Deeds, encumbering, among other
things, UIDC's interest in and to the Master Lease and Copley's interest in and
to the Central Area Lease (the "Mortgage"); and
WHEREAS, as a condition to making the Loan, Mortgagee has required
that the Master Lease be terminated with respect to the Central Area Premises
and that the Central Area Lease become a direct lease of the Central Area
Premises between the MTA and Copley under and pursuant to the terms of the
Direct Leasing Agreement and the Central Area Lease; and
WHEREAS, by Notice of Direct Lease dated the date hereof and recorded
immediately prior to the recording of this Confirmation in said Register of
Deeds (the "Notice"), Copley has given proper notice to the MTA exercising its
rights under the Direct Leasing Agreement to have the Central Area Lease become
a direct lease with respect to the Central Area Premises between the MTA and
Copley, and UIDC has, by executing the Notice, assigned its rights in and to the
Central Area Lease as landlord to the MTA in accordance with the terms of the
Direct Leasing Agreement; and
WHEREAS, the parties desire to confirm the transactions effected by
the Notice.
-2-
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Copley hereby confirms that it has caused the Master Lease to be
terminated with respect to the Central Area Premises pursuant to the Notice, and
that the Central Area Lease simultaneously with such termination has become a
direct lease between the MTA and Copley pursuant to the terms of Section 6 of
the Direct Leasing Agreement with the result that Copley's interest in the
Central Area Premises is independent of, and in no way contingent upon, the
Master Lease.
2. UIDC hereby confirms that by executing the Notice, UIDC has
assigned to the MTA all of its interest as lessor under the Central Area Lease
pursuant to the terms of Section 6 of the Direct Lease Agreement.
3. Mortgagee, as existing lender, hereby acknowledges that it has
executed the Notice to evidence its consent to the effectuation of the direct
lease described above pursuant to the Notice.
4. Copley hereby confirms that (i) the Mortgage covers and encumbers
among other things, such direct leasehold interest of Copley in and to the
Central Area Premises pursuant to the terms of the Central Area Lease with the
MTA, (ii) Mortgagee has a valid first mortgage lien on, among other things, such
direct leasehold interest of Copley in and to the Central Area Premises, and
(iii) the continuance in effect of the Central Area Lease as such direct lease
shall not alter or affect the continuance in effect or the priority of the lien
of the Mortgage, and the Mortgage constitutes a first mortgage lien on, among
other things, such direct leasehold interest of Copley in and to the Central
Area Premises, with the same priority.
5. Mortgagee hereby confirms that, as a result of such termination of
the Master Lease as to the Central Area Premises and such direct Central Area
Lease between the MTA and Copley, UIDC has been released from all its
obligations and liabilities under the Mortgage, the notes secured thereby (the
"Notes") and all other documents evidencing or securing the Loan (the "Other
Loan Documents"), and such release shall have no effect on Copley's or any other
party's obligations under such documents.
6. The provisions of Section 1.17 of the Mortgage are incorporated
herein by reference as if herein set forth in full and shall be fully applicable
to this instrument.
7. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Confirmation, as a sealed instrument, by their duly authorized representative(s)
as of the day and year first written above.
WITNESS/ATTEST:
COPLEY PLACE ASSOCIATES LLC,
a Delaware limited liability company
By: Overseas Partners Capital Corp.
its managing member
/s/ Marcia M. Miller By: /s/ Bruce M. Barone
- -------------------- -------------------
Its President and CEO
Hereunto duly authorized
By: JMB Realty Corporation,
its member
/s/ Stephanie C. Silvers By: /s/ Elizabeth Kogen
- ------------------------ -------------------
Its Vice President
Hereunto duly authorized
URBAN INVESTMENT AND
DEVELOPMENT CO.
an Illinois general partnership
By: JMB Realty Corporation
its managing general partner
/s/ Stephanie C. Silvers By: /s/ Elizabeth Kogen
- ------------------------ -------------------
Its Vice President
Hereunto duly authorized
/s/ K.C. Votta
- --------------
METROPOLITAN LIFE INSURANCE
COMPANY
a New York corporation
/s/ Joseph Vicker By: /s/ Mitchell E. Ryan
- ----------------- --------------------
Its Assistant Vice President
Hereunto duly authorized
-4-
<PAGE>
ACKNOWLEDGEMENTS
STATE OF GEORGIA )
) ss.:
COUNTY OF DEKALB )
On this the 30th day of July, 1997, before me, the undersigned
personally appeared Bruce M. Barone acknowledged himself/herself to be a
President of Overseas Partners Capital Corp., a Delaware corporation, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation; and that he signed his name thereto by like order for the
purposes therein contained.
In witness whereof I hereunto set my hand.
/s/ Elise Kitchens
------------------
NOTARY PUBLIC
12/12/2000
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
July 30, 1997
Then personally appeared before me, the above named Elizabeth Kogen, Vice
President of JMB Realty Corporation, a Delaware corporation, managing general
partner of URBAN INVESTMENT AND DEVELOPMENT CO., an Illinois general
partnership, who executed the foregoing instrument and acknowledged that he/she
executed the foregoing instrument as the free act and deed of said corporation
in its capacity as a member of said general partnership pursuant to proper
authorization of the members of the general partnership, and as the free act and
deed of said general partnership
/s/ Frank S. Caiazzo
--------------------
Notary Public
My Commission Expires:
FRANK S. CAIAZZO
Notary Public, State of New York
No. 43-4777178
Qualified in Richmond County
Certificate filed in New York County
Commission Expires March 30, 1998
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
July 30,1997
Then personally appeared the above-named Mitchell Ryan, Assistant Vice
President of Metropolitan Life Insurance Company, who executed the foregoing
instrument and acknowledged that he executed the foregoing instrument as the
free act and deed of said company.
/s/ Lily H. Lee
---------------
Notary Public
My commission expires June 13, 1998
LILY H. LEE
Notary Public, State of New York
No. 30-4934013
Qualified in Nassau County
Certificate Filed in New York County
Commission Expires June 13, 1998
<PAGE>
ACKNOWLEDGMENTS
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this the 30 day of July, 1997, before me, the undersigned,
--
personally appeared Elizabeth Kogen who acknowledged himself/herself to be a
Vice President of JMB Realty Corporation, a Delaware corporation, the
- --------------
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation; and that he signed his name thereto by like order for the
purposes therein contained.
In witness whereof I hereunto set my hand.
/s/ Frank Caiazzo
-----------------
FRANK S. CAIAZZO
Notary Public, State of New York
No. 43-4777178
Qualified in Richmond County
Certificate filed in New York County
Commission Expires March 30, 1998
<PAGE>
EXHIBIT "A"
Description of Premises
<PAGE>
Exhibit 10(bbbb)
<PAGE>
SECOND AMENDMENT
TO AMENDED AND RESTATED
FACILITY LEASE AGREEMENT
among
OVERSEAS PARTNERS LEASING, INC.,
and
UNITED PARCEL SERVICE
GENERAL SERVICES CO.
and
UNITED PARCEL SERVICE OF AMERICA, INC.
Affecting
340 MacArthur Boulevard
Mahwah, New Jersey, also known as
Lot 61.04, Block 135.01
Mahwah Township
Bergen County, New Jersey
<PAGE>
THIS SECOND AMENDMENT to AMENDED AND RESTATED FACILITY LEASE AGREEMENT
(this "Amendment") is made as of this 28th day of April 1993, by and among
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OVERSEAS PARTNERS LEASING, INC., a Delaware corporation ("OPL Leasing"), UNITED
PARCEL SERVICE GENERAL SERVICES CO., a Delaware corporation ("GSC"), and UNITED
PARCEL SERVICE OF AMERICA, INC., a Delaware corporation ("UPS").
WITNESSETH:
WHEREAS, OPL Leasing, GSC and UPS entered into a Facility Lease
Agreement dated as of December 28, 1989 (the "Original Agreement") pursuant to
which GSC was granted the use of the Facility for the purpose of performing
billing activities and other data processing services;
WHEREAS, OPL Leasing, GSC and UPS entered into an Amended and Restated
Facility Lease Agreement dated as of November 6, 1990, (the "Agreement"),
pursuant to which the terms and provisions of the Original Agreement were
amended and restated to reflect, inter alia, the issuance of debt securities to
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refinance the Interim Financing;
WHEREAS, a Memorandum of the Agreement was recorded in the Clerk's
Office of Bergen County, New Jersey, on November 7, 1990, in Book 7408, page 68
(the "Memorandum");
WHEREAS, OPL leasing has caused the construction on the Facility Site
of the Facility;
WHEREAS, OPL Leasing, GSC and UPS entered into a First Amendment to
Amended and Restated Facility Lease Agreement dated as of February 20, 1992 (the
"First Amendment"), pursuant to which the definition of the term "Facility Site"
was amended to
<PAGE>
reflect certain road improvements and other minor modifications to the
description of the Facility Site which is attached as Exhibit A hereto and
incorporated herein;
WHEREAS, a copy of the First Amendment was recorded in the Clerk's
Office of Bergen County, New Jersey on July 1, 1992 in Book 7528, page 152;
WHEREAS, GSC and UPS have requested that OPL Leasing expand the
Facility by constructing an addition to the Facility for the benefit of GSC and
UPS in order to accommodate projected growth of UPS requiring additional space;
WHEREAS, OPL Leasing has agreed to construct an addition to the
Facility for the benefit of GSC and UPS pursuant to the terms and conditions set
forth herein, including, without limitation, an amendment to the lease Payment
provisions of the Agreement.
WHEREAS, the parties hereto desire to amend the Agreement to provide
for the construction of an addition to the Facility and for the creation of a
new payment category attributable to the use and occupancy by GSC and UPS of
such addition.
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Amended and Supplemental Definitions. The Agreement is hereby
------------------------------------
amended by adding thereto the following amended and restated definitions and
supplemental definitions:
(a) "Addition" means that certain newly constructed expansion of the
Facility initially containing approximately 27,000 square feet of space with the
capability of accommodating future expansion of up to an additional 54,000
square feet of space to be constructed in accordance with the Addition
Specifications.
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(b) "Addition Cost" means the cost to construct and complete the
Addition.
(c) "Addition Specifications " means the plans and
specifications relating to the construction of the Addition, which are attached
hereto as Schedule 1 (c).
(d) "Addition Work Change" means any addition, deletion or revision
in the work from that currently described in the Addition Specifications or any
other plans or specifications detailing the construction of the Addition.
(e) "Alternative Contingent Tolls" means the tolls paid by GSC
pursuant to Section 5.04A of this Agreement.
(f) "Alternative Tolls" means Alternative Additional Tolls and
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Alternative Contingent Tolls.
(g) "Anticipated completion Date" means December 1, 1995.
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(h) "Contingent Tolls" means the tolls paid by GSC pursuant to
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Section 5.03A of this Agreement, which shall be based upon the mean number of
active Accounts Processed at the Facility on each day in a Semester.
(i) "Contractor" means McBride Enterprises, Inc..
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(j) "Facility" means buildings and other improvements located on
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the Facility Site to be leased hereunder to UPS and its Subsidiaries as their
primary world-wide data processing and telecommunications production and
operation center; it consists of (1) three connected structures with a total
area of approximately 408,000 square feet as follows: three floor office
structure (approximately 310,000 square feet), two floor computer structure
(approximately 54,000 square feet) and central service structure (approximately
44,000 feet), (2) the Addition, with a total area of approximately 27,000
square feet, (3) a four level parking
<PAGE>
garage of approximately 562,000 square feet and (4) all other areas within the
Facility Site. Any deviation of the Facility from the description of the
Facility herein which is immaterial or which is agreed to by the parties hereto
shall have no effect on the rights and obligations of the parties hereto, except
as explicitly provided hereby.
(k) "Maximum Addition Cost" means $22,000,000 (twenty two million
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dollars).
(l) "Minimum Tolls" means the tolls paid by GSC pursuant to Section
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5.02A of this Agreement.
(m) "Non-Use" means that, after the Commercial Operation Date, less
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than a daily mean of 700,000 Accounts shall have been Processed at the Facility
in any Semester (based on use on days on which the Subsidiaries provide ground
delivery and pick up services), other than the Semester in which the Commercial
Operation Date occurs. Non-Use shall not occur if GSC has elected to pay
Alternative Additional Tolls and Alternative Contingent Tolls. Non-Use shall
not include circumstances arising out of an Event of Loss or Force Majeure.
(n) "Non-Use Tolls " means for any Semester, the difference, if
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positive, between (a) the sum of the Additional Tolls and Contingent Tolls which
would have been payable had a daily mean of 700,000 Accounts been Processed
during such Semester (based on use on days on which the Subsidiaries provide
ground delivery and pick up services) and (b) the sum of the actual Additional
Tolls and Contingent Tolls payable on account of such Semester.
(o) "O&M Component" means that portion of Additional Tolls,
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Alternative Additional Tolls, Contingent Tolls or Alternative Contingent Tolls
which is intended to represent anticipated Operations and Maintenance Costs .
<PAGE>
(p) "Operational Completion" means that (a) all Work on the Addition
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has been completed except for incomplete and defective Work normally considered
to be "punch list" items which may be completed or corrected without
interruption to or interference with installation of the equipment to be used in
the Addition and (b) all Legal Requirements which are a condition to the
commencement of use of the Addition for its Intended Use have been met
(including, if required, the issuance of any certificate of occupancy).
(q) "Operational Date" means the date on which UPS and its
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Subsidiaries shall commence using the capabilities of the Addition in the
ordinary course of their business.
(r) "Termination Value" means the sum of (i) an amount determined
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by multiplying the Maximum Facility Cost (as defined in the Agreement) times the
percentage listed in Schedule1.1 attached to this Agreement for the Semiannual
Period in which this Agreement is terminated, and (ii) an amount determined by
multiplying the Maximum Addition Cost times the percentage listed in Schedule
1.1A attached to this Amendment for the Semiannual Period in which this
Agreement is terminated.
(s) "Tolls" means the Basic Tolls, Supplemental Basic Tolls,
Additional Tolls, Non-Use Tolls, Alternative Additional Tolls, Contingent Tolls,
Minimum Tolls and Alternative Contingent Tolls.
2. Supplemental Provisions Regarding Construction of Addition. The
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Agreement is hereby amended and supplemented by the addition of the following
new Article IV-A which is hereby added to the Agreement:
<PAGE>
ARTICLE IV A
CONSTRUCTION OF ADDITION
4.01 A. Construction of Addition. (a) Starting on April 25, 1994, OPL
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Leasing shall cause. the Addition to be constructed in accordance with the
Addition Specifications.
(b) OPL Leasing shall cause sufficient funds to be made available
to finance the construction of the Addition.
(c) GSC shall have reasonable access to the site of the Addition
(the "Addition Site") during the construction period and shall review the
construction of the Addition with OPL Leasing for compliance with the Addition
Specifications. GSC shall cause its representatives, while on the Addition
Site, to comply with all reasonable safety and security rules adopted by OPL
Leasing and its Contractor and all subcontractors and shall use its best efforts
not to interfere with the work of the Contractor and all subcontractors at the
Addition Site.
(d) OPL Leasing shall use its best efforts to cause Operational
Completion to occur on or before December 1, 1995.
(e) OPL Leasing shall notify GSC immediately upon Operational
Completion. Operational Completion shall be deemed to have occurred as of the
date of such notice, unless GSC shall notify OPL Leasing within five (5)
Business Days of any material defects in the Work. If the parties are unable to
agree as to the occurrence of the Operational Completion, the dispute, including
the date on which Operational Completion shall be deemed to have occurred, shall
be resolved by arbitration as provided in Section 10.09.
<PAGE>
(f) GSC shall manage the Work on OPL Leasing's behalf, and shall
supervise the Work in a diligent manner reflecting its experience in managing
constructed projects of a similar nature. GSC, on behalf of OPL Leasing, shall
take all such actions as are necessary to cause the Addition to be designed and
constructed in accordance with the Addition Specifications. OPL Leasing shall
pay to GSC for such services a fee equal to 0.5% (one half of one percent) of
the Addition Cost. Such fee shall be paid to GSC on the Operational Date.
4.02 A. Installation of Equipment. (a) GSC shall, at its own cost,
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expense and risk, obtain and install all equipment necessary to carry out the
Intended Use of the Addition.
(b) GSC shall use its best efforts to have all such equipment
installed and ready for its Intended Use and to cause the Operational Date to
occur as soon as commercially practicable.
(c) GSC shall notify OPL Leasing immediately of the Operational
Date.
4.03 A. Damages for Delay in Operational Date.
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(a) If OPL Leasing causes Operational Completion to occur on
or before the Anticipated Completion Date, and GSC fails to cause the
Operational Date to occur on or before thirty (30) days after the later to occur
(i) of the Anticipated Completion Date or (ii) the date of Operational
Completion, then GSC shall pay to OPL leasing, as liquidated damages and not as
a penalty, the Alternative Contingent Tolls for each month, or part thereof,
that the Operational Date is so delayed.
(b) Anything in Section 4.03A to the contrary notwithstanding,
GSC shall not be liable to OPL Leasing for any amount of liquidated damages in
excess of the
<PAGE>
amount of delay damages, if any, received by GSC under its contracts for the
purchase, delivery or installation of the equipment to be installed in the
Addition, unless such delay is caused by the gross negligence or willful
misconduct of GSC.
4.04 A. Addition Work Changes. (a) GSC may request and OPL Leasing shall
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cause its contractors, suppliers and materialmen to make any Addition Work
Changes to the extent that such Work Changes, taken together with all other
Addition Work Changes previously made under this paragraph, do not materially
impair the quality of the Addition as described in the Addition Specifications,
delay the Operational Completion by more than thirty (30) days, materially
change the nature of the Addition or its suitability for its Intended Use, delay
the installation of the equipment, materially increase OPL Leasing's costs of
maintaining the Addition in accordance with this Agreement, change the useful
life of the Addition, cause the Addition to be "limited use property" or cause a
material increase in the Addition Cost or materially change the terms of any
construction contract relating to the construction of the Addition.
(b) OPL Leasing may at the request of the Contractor, agree to any
Addition Work Changes to the extent that such Addition Work Changes, taken
together with all other Addition Work Changes previously made under this
paragraph, do not materially impair the quality of the Addition as described in
the Addition Specifications, delay Operational Completion by more than thirty
(30) days, materially change the nature of the Addition or its suitability for
the Intended Use, delay the installation of the equipment in the Addition,
materially increase GSC's costs of maintaining the Addition in accordance with
this Agreement, change the useful life of the Addition, cause the Addition to be
"limited use property" or cause a material increase in the Addition Cost, or
materially change the terms of the construction contract between OPL Leasing and
the Contractor. OPL Leasing shall give GSC no less than fifteen (15) days prior
written notice of its intention to make a change authorized by this paragraph.
If GSC objects to such change, the parties shall use their best
<PAGE>
efforts to reach agreement on the proposed Addition Work Change, failing which,
OPL Leasing may proceed with the Addition Work Change.
(c) If GSC desires an Addition Work Change, or if OPL Leasing has
been notified by the Contractor that it requires an Addition Work Change, in
either case not covered by paragraph (a) or (b) of this Section 4.04A, GSC or
OPL Leasing, as the case may be, at its own cost and expense, shall prepare a
proposal for the Addition Work Change which shall include a description of (i)
the necessary changes in the Addition Specifications and the construction
contract between OPL Leasing and the Contractor, (ii) the reason for the change
and (iii) the effect of such changes on Operational Completion, the useful life
of the Addition and the Addition Cost. Such party shall deliver the proposal
for the Addition Work Change to the other party and, within five (5) days of
receipt of such proposal, OPL Leasing and GSC shall agree upon such changes to
this Agreement as are reasonably necessary to reflect the requested Addition
Work Changes, including, but not limited to, changes in the Minimum Tolls,
Contingent Tolls, Alternative Contingent Tolls, Non-Use Tolls and Termination
Value in accordance with Section 4.05A so as to reflect the changes in the
Addition Cost required by the Addition Work Change, changes in the costs of
operation and maintenance of the Addition to OPL Leasing, changes in utility
usage, and changes in Property Taxes and similar items. If the parties are
unable to agree, the dispute shall be resolved by arbitration under Section
10.09. Notwithstanding the foregoing, neither GSC nor OPL Leasing shall be
obligated to agree to any Addition Work Change which would (i) cause the
Addition Cost to exceed the Maximum Addition Cost (not including the amount of
any property insurance proceeds or condemnation awards received by OPL Leasing
in connection with the event resulting in the Addition Work Change, which
amounts shall be made available for the repair, construction or modification of
the Facility) by more than 5 %; (ii) change the economic useful life of the
Addition, or its fitness for the Intended Use; (iii) cause Operational
Completion to be delayed by more than 120 days; or (iv) materially impact on the
tax or accounting treatment of the transactions and the payments contemplated by
this Agreement. If OPL Leasing refuses,
<PAGE>
pursuant to the preceding sentence, to accept any Addition Work Change that is
necessary to the completion of the Addition so it is suitable for its Intended
Use, then an Event of Loss shall be deemed to have occurred as of the date OPL
Leasing so informs GSC.
4.05 A. Addition Cost; Adjustment to Tolls.
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(a) (i) If the Addition Cost exceeds the Maximum Addition Cost
for any reason, including an Addition Work Change implemented by GSC and OPL
Leasing pursuant to Section 4.04A, the excess of the Addition Cost over the
Maximum Addition Cost shall be funded first out of insurance proceeds or
condemnation awards available for that purpose, if any, and second by OPL
Leasing from its own resources. If OPL Leasing becomes obligated to expend any
amount in excess of the Maximum Addition Cost, or if as a result of an Addition
Work Change there is a change in the costs to OPL Leasing of operation and
maintenance of the Addition, utility usage, Property Taxes or similar items, the
Contingent Tolls, Alternative Contingent Tolls and termination Value shall be
increased in accordance with the following sentences to reflect the additional
amounts invested by, and additional expenses expected to be incurred by, OPL
Leasing; provided that no such increase shall occur if the excess costs are the
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result of the gross negligence or willful misconduct of OPL Leasing. Within
sixty (60) days following the Operational Date, OPL Leasing shall prepare
proposed revised Schedules 5.03A, 5.04A and 1. 1A to reflect increases in the
Contingent Tolls, Alternative Contingent Tolls and Termination Value which shall
preserve OPL Leasing's after tax internal rate of return and shall forward such
Schedules to GSC.The parties shall then meet within thirty (30) days of the
date of such transmittal and agree upon adjustments to the aforementioned
Schedules. If the parties cannot so agree within thirty (30) days of such
meeting, the dispute shall be resolved by arbitration pursuant to Section 10.09.
Any revision in such Schedules shall be retroactive to the Operational Date and
GSC shall promptly pay to OPL Leasing any arrearages with respect to any payment
of Tolls made prior to such amendments being agreed upon or resolved by
arbitration.
<PAGE>
(ii) If the Addition Cost is less than the Maximum Addition Cost,
then the Contingent Tolls, the Alternative Contingent Tolls and Termination
Value shall be decreased to reflect the lesser amounts invested by OPL Leasing.
Within sixty (60) days following the Operational Date, OPL Leasing shall prepare
proposed revised Schedules 5.03A, 5.04A and 1. 1A to reflect the proposed
decreases in the Contingent Tolls, Alternative Contingent Tolls and Termination
Value which shall preserve OPL Leasing's after tax internal rate of, return and
shall forward such Schedules to GSC. Thereupon, the provisions of the last two
sentences of subparagraph 4.05A(a) (i) above shall apply.
3. Amendment to Lease Payment Provisions. Article V of the Agreement
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is hereby amended by adding thereto, or substituting, as the case may be, the
following provisions:
5.02 A. Minimum Tolls for Addition
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In consideration of the lease of the Addition, GSC shall pay OPL Leasing
the Minimum Tolls from December 1, 1995 until the earlier of (i) the scheduled
date of expiration of this Agreement or (ii) the termination of this Agreement
in accordance with Article VIII. Each payment of Minimum Tolls for each
Semester shall be in the amount set forth in Schedule 5.02A hereto.
5.03 A. Contingent Tolls for Use of Addition
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Subject to Section 5.04, GSC shall pay to OPL Leasing the Contingent Tolls
from the Operational Date, as additional consideration for the lease of the
Addition, such Contingent Tolls to be determined in accordance with Schedule
5.03A.
<PAGE>
5.04. Alternative Additional Tolls and
Alternative Contingent Tolls Payable in
the Event of Change in Intended Use.
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(a) If GSC wishes to have the right to use the Facility (including
the Addition) for a purpose other than the Intended Use or to otherwise be
released from its obligations under Section 5.01(a) effective as of the first
day of a Semester, GSC shall give written notice of such intention of OPL
Leasing at least sixty (60) days prior to the first day of such Semester.
Commencing as of the first day of the Semester specified in such notice GSC
shall pay as additional consideration for the lease of the Facility, and in lieu
of Additional Tolls and Contingent Tolls, the Alternative Additional Tolls and
Alternative Contingent Tolls, determined in accordance with Schedules 5.04 and
5.04A, respectively. Thereafter, GSC and UPS shall have no obligations under
Section 5.01(a) (other than those set forth in the last sentence thereof) or
5.11.
(b) In consideration for the payment of the alternative Additional
Tolls and Alternative Contingent Tolls, GSC shall have the right to use the
Facility for any lawful purpose whatsoever, provided, however, that such use
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shall not materially impair or diminish the Fair Market Value that the Facility
would have had the Intended Use continued.
(c) Notwithstanding such change in the Intended Use, GSC shall be
obligated to pay the Basic Tolls, the Contingent Payments and the Minimum Tolls.
(d) GSC shall have the right to make the election described in
subparagraph 5.04 (a) at any time, provided, however, that it shall not have the
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right to subsequently reverse the exercise of its election under such
subparagraph.
<PAGE>
5.6B. Proration of Operations and Maintenance Costs
for Additional Tolls and Contingent Tolls
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(a) Prior to the Operational Date, OPL Leasing shall prepare a
proposed revised schedule of Operations and Maintenance Costs based upon (i) OPL
Leasing's actual Operations and Maintenance Costs over the immediately preceding
twelve (12) months and (ii) the anticipated usage of the Facility (including
therein the Addition) by GSC from the Operational Date until the date which
shall be the sixth (6th) anniversary of the Basic Tolls Commencement Date. Such
schedule shall reflect the increased Operations and Maintenance Costs
anticipated as a result of the construction of the Addition and shall be used to
calculate the O&M Component of the Additional Tolls and Contingent Tolls
pursuant to paragraph (c) below. The schedule shall be effective as to
Additional Tolls, Alternative Tolls and Contingent Tolls payable on account of
the Semester beginning after the Operational Date, provided, however, that from
the Operational Date until the date such Semester begins, GSC shall pay
Contingent Tolls, the 0 & M Component of which shall be calculated in accordance
with paragraph (c)(y) below and shall be prorated to reflect the period of
time extending from the Operational Date until the beginning of the
aforementioned Semester.
(b) As soon as possible after the sixth (6th) anniversary of the
Basic Tolls Commencement Date and, thereafter, after every third (3rd)
anniversary of the Basic Tolls Commencement Date, OPL Leasing shall prepare a
proposed revised schedule of Operations and Maintenance Costs pursuant to
Section 5.06(b).
(c) For purposes of calculating the O&M Component of the Additional
Tolls and Contingent Tolls, (x) the O&M Component for the Additional Tolls (for
each increment of 1,000 Accounts and up to the first 1.4 million Accounts) shall
be equal to the product of (i) the Operations and Maintenance Costs (as
calculated pursuant to paragraph 5.06B (a) or (b) above, as applicable) times
(ii) a number, the numerator of which shall be equal to 408,000 and the
denominator of which shall be equal to the total square footage of the
<PAGE>
Facility (including therein the Addition), times (iii) 1,000, times (iv) 1/2,
divided by 1,300,000 (one million three hundred thousand) and (y) the O&M
Component for the Contingent Tolls (for each increment of 1,000 Accounts and up
to the first 1.4 million Accounts) shall be calculated as in item (x) above,
except that the numerator in item (ii) shall be equal to the square footage of
the Addition. For each increment of 1,000 Accounts in excess of 1,400,000
Accounts, (p) the O&M Component for the Additional Tolls shall be equal to the
amount set forth in Schedule 5.03 subject to any applicable adjustment thereto)
and (q) the O&M Component for the Contingent Tolls shall be equal to 0.
4. Fairness Opinion. This Amendment shall be effective upon the
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receipt by each of OPL Leasing, UPS and GSC of a fairness opinion, or of
fairness opinions, in form and substance acceptable to the recipient(s) thereof
to the effect that the transactions contemplated by this Amendment are fair,
from a financial point of view, to the recipient of the opinion.
5. Guaranty of UPS. UPS hereby reaffirms its guaranty set forth in
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Section5.07 of the Agreement as if it were fully set forth in this Amendment and
hereby confirms that such guaranty extends to the Minimum Tolls, Contingent
Tolls and Alternative Contingent Tolls.
6. Agreement Ratified and Confirmed. The terms and provisions of the
--------------------------------
Agreement, the Memorandum and the First Amendment shall remain in full force and
effect as modified by this Amendment. The parties hereby ratify and confirm and
shall remain bound by the terms and provisions of the Agreement, the Memorandum
and the First Amendment as amended hereby.
7. Defined Terms. Capitalized term not defined herein shall have the
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meanings ascribed to such terms in the Agreement.
<PAGE>
8. Counterparts. This Amendment may be executed in one or more
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identical counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same instrument.
9. Section headings. The section headings which appear in this
-----------------
Amendment are included solely for convenience of reference and are not intended
to govern, supplement, limit or in any way affect the terms hereof.
10. Entire Agreement. This Amendment constitutes the entire
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understanding of the parties hereto with respect to the amendment of the terms
of the Agreement and the parties shall not be bound by any agreements,
understandings or conditions respecting the subject matter hereof other than
those expressly set forth and stipulated in this Amendment.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
ATTEST: [Corporate seal] OVERSEAS PARTNERS LEASING, INC.
By: /s/ Elise R. Kitchens By: /s/ Michael J. Molletta
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Name: Elise R. Kitchens Name: Michael J. Molletta
Title: Paralegal Title: Vice President
ATTEST: [Corporate seal] UNITED PARCEL SERVICE
GENERAL SERVICES CO.
By: /s/ Laura C. Snider /s/ Louis A. Freedman
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Name: Laura C. Snider Name: Louis A. Freedman
Title: Sr. Admin. Asst. Title: Vice President
<PAGE>
ATTEST: [Corporate seal] UNITED PARCEL SERVICE OF
AMERICA, INC.
By: /s/ Laura C. Snider /s/ Robert J. Clanin
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Name: Laura C. Snider Name: Robert J. Clanin
Title: Sr. Admin. Asst. Title: Senior Vice President
<PAGE>
EXHIBIT A
Legal Description
of Facility Site
BEGINNING at a point in the new easterly right-of-way line of Darlington
Avenue (said point being 74.9 feet measured at right angles easterly of the
center line of Darlington Avenue) and being distant 210.44 feet measured on a
bearing of South 17 degrees 34 minutes 06 seconds East along said line of
Darlington Avenue from the intersection of its northerly prolongation with the
westerly prolongation of the southerly right-of-way line of MacArthur Boulevard
(100 feet wide). Said point being also 50.55 feet measured on a bearing of
North 81 degrees 26 minutes 59 seconds East (along the former boundary between
lands of the Grantors and lands of Ramapo Ridge-McBride Office Park) from the
original Point of Beginning of the herein described lot as described in a deed
recorded in the Bergen County Clerk's Office in Book 7341 Page 347. All as
shown on a certain plat entitled "Subdivision Plat of Lots 61.04, 61.05, 62, 63
and 64 all in Block 135.01, Township of Mahwah, County of Bergen, N.J." prepared
by Urban Planning & Engineering Associates, Inc., 808 High Mountain Road,
Franklin Lakes, N.J., dated April 2, 1991, and running; thence
1. North 17 degrees 34 minutes 06 seconds West distant 115.44 feet along the
new easterly right-of-way line of Darlington Avenue to a point of curvature
(said point being 75.00 feet measured at right angles easterly of the
center line of Darlington Avenue); thence
2. Northwesterly, northerly and northeasterly an arc distance of 149.23 feet
(through an angle of 90 -00'-00") along a curve to the right (concave to
the southeast) having a radius of 95.00 feet connecting said line of
Darlington Avenue with the aforesaid southerly right-of-way line of
MacArthur Boulevard to a point of tangency in said line of MacArthur
Boulevard; thence
3. North 72 degrees 25 minutes 54 seconds East distant 34.02 feet along the
southerly right-of-way line of MacArthur Boulevard to a point of curvature
in the same; thence
4. Northeasterly an arc distance of 814.94 feet (through an angle of 44 -28'-
09") along the same on a curve to the left (concave to the north) having a
radius of 1,050.00 feet to a point of tangency in the same; thence
5. North 27 degrees 57 minutes 45 seconds East distant 677.68 feet along the
same to a point in the same; thence
6. South 62 degrees 02 minutes 15 seconds East distant 184.68 feet along the
boundary line between lands of the Grantors on the south and lands of
Ramapo Ridge-McBride Office Park (known as Lot 61.05 Block 135.01 on the
current Tax Map of Mahwah) on the north to an angle point; thence
7. South 04 degrees 00 minutes 44 seconds East distant 791.32 feet along the
same to an angle point; thence
<PAGE>
8. South 37 degrees 15 minutes 26 seconds East distant 592.22 feet along the
same to an angle point; thence
9. South 71 degrees 21 minutes 53 seconds East distant 120.00 feet to a point
in the northwesterly right-of-way line of Ridge Road (35 feet wide from
centerline); thence
10. Southwesterly an arc distance of 527.62 feet (through an angle of 15 -32'-
37") along the northwesterly right-of-way line of Ridge Road on a curve to
the left (concave to the east) having a radius of 1,944.86 feet to a point
where the same is intersected by the northerly right-of-way line of Ramsey
Road (an unimproved right-of-way 40 feet wide); thence
11. North 82 degrees 15 minutes 26 seconds West distant 447.83 feet along said
northerly right-of-way line of Ramsey Road to an angle point in the same;
thence
12. North 86 degrees 39 minutes 29 seconds West distant 735.06 feet along the
same to an angle point in the same; thence
13. North 83 degrees 29 minutes 16 seconds West distant 185.62 feet along the
same to its intersection with the new northeasterly right-of-way line of
Darlington Avenue, said point being 36.45 feet measured radially
northeasterly of the center line of Darlington Avenue; thence
14. Northwesterly an arc distance of 365.74 feet along the new northeasterly
and easterly right-of-way line of Darlington Avenue on a non-tangent curve
to the right (concave to the east) having a radius of 737.74 feet and a
chord distance of 362.01 feet which bears North 31 degrees 46 minutes 15
seconds West to an angle point in the new easterly right-of-way line of
Darlington Avenue (said point being 58.01 feet measured radially easterly
of the center line of Darlington Avenue; thence
15. North 03 degrees 06 minutes 59 seconds East distant 33.34 feet along the
same to an angle point (said point being 72.51 feet measured radially
easterly of the center line of Darlington Avenue); thence
16. North 17 degrees 34 minutes 06 seconds West distant 94.56 feet along the
same to a point in the same and the Point or Place of Beginning.
Said lot containing 39.000 acres more or less.
Said lot known and designated as Lot 61.04 Block 135.01 on the above-cited
subdivision plat and on the current Tax Map of the Township of Mahwah.
The above description is written in accordance with the afore-referenced
subdivision plat of Lots 61.04, 61.05, 62, 63 and 64 all in Block 135.01.
Said subdivision modified the lot along its Darlington Avenue frontage to
allow for the widening of the right-of-way of said
<PAGE>
road and along the above described seventh course to maintain its original
area of 39 acres. Said lot having originated on a plat filed in the Bergen
County Clerk's Office on 6/20/89 as Map No. 8671 on which plat said lot was
also designated as Lot 61.04 Block 135.01.
Said lot was subject to two five-foot wide (for a total of ten feet) road
widening easements (to the County of Bergen) along its original Darlington
Avenue frontage. One of said easements is recorded in Deed Book 6344 Page
326 and one recorded in Deed Book No. 7220 Page 577. Said easements now
lie outside of said lot due to the additional widening of Darlington
Avenue.
Said lot also subject to a 30-foot wide Rockland Electric Company right-of-
way (20 feet of said width lying within the above-described lot) located
along its Ridge Road frontage (the above-described tenth course). Said
right-of-way recorded in Deed Book 5840 Page 186).
Said lot also subject to two detention basin easements and delineated
wetlands as shown on the above referenced plats.
Together with a 25 foot and variable width drainage easement through Lot
61.03 Block 135 for the installation of a pipe which is to carry storm
water run-off discharged from the from the detention basins on the above-
described lot to the existing storm water facilities within the Darlington
Avenue right-of-way. Said easement being shown on the above referenced
Filed Map No. 8671.
<PAGE>
Schedule 1 (c)
--------------
Addition Specifications
(To be attached)
<PAGE>
Schedule 1.lA
Termination Value as a Percentage of
Maximum Addition Cost
Semester Start Period
12 Oct-95 100.000000%
13 Apr-96 99.903344%
14 Oct-96 99.924757%
15 Apr-97 99.718023%
16 Oct-97 99.356848%
17 Apr-98 98.836422%
18 Oct-98 98.209180%
19 Apr-99 97.466492%
20 Oct-99 96.621240%
21 Apr-00 95.655326%
22 Oct-00 94.610661%
23 Apr-01 93.478195%
24 Oct-01 92.300216%
25 Apr-02 91.068827%
26 Oct-02 89.796821%
27 Apr-03 88.469057%
28 Oct-03 87.097750%
29 Apr-04 85.668003%
30 Oct-04 84.191503%
31 Apr-05 82.653623%
32 Oct-05 81.065503%
33 Apr-06 79.412883%
34 Oct-06 77.706325%
35 Apr-07 75.931954%
36 Oct-07 74.099719%
37 Apr-08 72.196160%
38 Oct-08 70.230570%
39 Apr-09 68.189928%
40 Oct-09 66.082836%
41 Apr-10 63.896735%
42 Oct-10 61.641715%
43 Apr-11 59.306319%
44 Oct-11 56.899987%
45 Apr-12 54.118182%
46 Oct-12 51.848367%
47 Apr-13 49.198685%
48 Oct-13 46.468514%
49 Apr-14 43.647452%
50 Oct-14 40.740374%
51 Apr-15 37.737460%
52 Oct-15 34.642667%
53 Apr-16 31.446790%
54 Oct-16 28.152812%
55 Apr-17 24.752182%
56 Oct-17 21.246849%
57 Apr-18 17.628957%
58 Oct-18 13.899355%
59 Apr-19 10.000000%
<PAGE>
Schedule 5.02 A
---------------
Minimum Tolls for Additions
[Intentionally Left Blank]
<PAGE>
Schedule 5.03 A
---------------
Contingent Tolls for Use of Addition
Revenues Per Thousand Accounts Processed
----------------------------------------
Semester Greater than 1,200,000 1,700,000 Greater than 1,700,000
-------- ---------------------- --------- ----------------------
12 $730 $245.00 $5.00
13 $730 $213.04 $5.00
14 $730 $188.46 $5.00
15 $730 $168.97 $5.00
16 $730 $153.13 $5.00
17 $730 $140.00 $5.00
18 $730 $128.95 $5.00
19 $730 $119.51 $5.00
20 $730 $111.36 $5.00
21 $730 $104.26 $5.00
22 $730 $98.00 $5.00
23 $730 $98.00 $5.00
24 $730 $98.00 $5.00
25 $730 $98.00 $5.00
26 $730 $98.00 $5.00
27 $730 $98.00 $5.00
28 $730 $98.00 $5.00
29 $730 $98.00 $5.00
30 $730 $98.00 $5.00
31 $730 $98.00 $5.00
32 $730 $98.00 $5.00
33 $730 $98.00 $5.00
34 $730 $98.00 $5.00
35 $730 $98.00 $5.00
36 $730 $98.00 $5.00
37 $730 $98.00 $5.00
38 $730 $98.00 $5.00
39 $730 $98.00 $5.00
40 $730 $98.00 $5.00
41 $730 $98.00 $5.00
42 $730 $98.00 $5.00
43 $730 $98.00 $5.00
44 $730 $98.00 $5.00
45 $730 $98.00 $5.00
46 $730 $98.00 $5.00
47 $730 $98.00 $5.00
48 $730 $98.00 $5.00
49 $730 $98.00 $5.00
50 $730 $98.00 $5.00
51 $730 $98.00 $5.00
52 $730 $98.00 $5.00
53 $730 $98.00 $5.00
54 $730 $98.00 $5.00
55 $730 $98.00 $5.00
56 $730 $98.00 $5.00
57 $730 $98.00 $5.00
58 $730 $98.00 $5.00
59 $730 $98.00 $5.00
<PAGE>
Schedule 5.04 A
Alternative Contingent Tolls
Revenues Per Thousand Accounts Processed
- ----------------------------------------
Semester 1,200,000 1,700,000 Greater than 1,700,000
- -------- --------- --------- ----------------------
12 $730 $245.00 $5.00
13 $730 $213.04 $5.00
14 $730 $188.46 $5.00
15 $730 $168.97 $5.00
16 $730 $153.13 $5.00
17 $730 $140.00 $5.00
18 $730 $128.95 $5.00
19 $730 $119.51 $5.00
20 $730 $111.36 $5.00
21 $730 $104.26 $5.00
22 $730 $98.00 $5.00
23 $730 $98.00 $5.00
24 $730 $98.00 $5.00
25 $730 $98.00 $5.00
26 $730 $98.00 $5.00
27 $730 $98.00 $5.00
28 $730 $98.00 $5.00
29 $730 $98.00 $5.00
30 $730 $98.00 $5.00
31 $730 $98.00 $5.00
32 $730 $98.00 $5.00
33 $730 $98.00 $5.00
34 $730 $98.00 $5.00
35 $730 $98.00 $5.00
36 $730 $98.00 $5.00
37 $730 $98.00 $5.00
38 $730 $98.00 $5.00
39 $730 $98.00 $5.00
40 $730 $98.00 $5.00
41 $730 $98.00 $5.00
42 $730 $98.00 $5.00
43 $730 $98.00 $5.00
44 $730 $98.00 $5.00
45 $730 $98.00 $5.00
46 $730 $98.00 $5.00
47 $730 $98.00 $5.00
48 $730 $98.00 $5.00
49 $730 $98.00 $5.00
50 $730 $98.00 $5.00
51 $730 $98.00 $5.00
52 $730 $98.00 $5.00
53 $730 $98.00 $5.00
54 $730 $98.00 $5.00
55 $730 $98.00 $5.00
56 $730 $98.00 $5.00
57 $730 $98.00 $5.00
58 $730 $98.00 $5.00
59 $730 $98.00 $5.00
<PAGE>
Exhibit 10(cccc)
<PAGE>
PREPARED BY AND
WHEN RECORDED MAIL TO:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Caryn L. Chalmers, Esq.
THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage") is
made as of August 27, 1997, by OVERSEAS PARTNERS (333), INC., an Illinois
corporation ("Mortgagor") and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation, having offices at 130 East Randolph Street, Suite
1400, Chicago, Illinois 60601 ("Mortgagee").
WITNESSETH:
-----------
WHEREAS, Mortgagor by its promissory note of even date herewith ("Note") is
indebted to Mortgagee in the principal sum of $65,000,000.00;
WHEREAS, Mortgagor desires to secure the payment of and the performance of all
of its obligations under the Note and certain additional Obligations (as
hereinafter defined);
NOW, THEREFORE, in consideration of the principal sum of the Note and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS,
PLEDGES, WARRANTS, CONVEYS A.ND MORTGAGES unto Mortgagee, its successors and
assigns, the property described in clauses (i) through (ix) below and all of the
right, title, interest, estate and claim of Mortgagor now owned or hereafter
acquired in, to or relating, thereto (collectively, the "Property"):
(i) That certain real property located in the County of Cook, State of
Illinois, and more fully described in EXHIBIT A attached hereto and made a
---------
part hereof (the "Land");
(ii) Any and all buildings and improvements, now or hereafter erected or
located in or on the Land, including all Fixtures (as hereinafter defined)
that are presently or become so related to such buildings and improvements
that an interest in them arises under the real estate laws of the State in
which the Premises are located, together with all appurtenances and
additions thereto and betterments, renewals, substitutions and replacements
thereof, all of which shall be deemed and construed to be part of the
realty (collectively, the "Improvements" and, together with the Land,
sometimes hereinafter referred to, collectively, as the "Premises");
<PAGE>
(iii) All items owned by Mortgagor and incorporated as part of or
attributed or affixed to any of the Premises or other real property
included in the Property or any other interest of Mortgagor in, to or
relating to the Premises, in such manner that such items are no longer
personal property under the laws of the State in which the Premises are
located, whether or not the same constitute Fixtures;
(iv) All rents, issues, profits, royalties, license fees, concession
fees, income and receipts of any type or kind and other benefits derived
from all or any part of the Property (collectively, the "Rents");
(v) All easements, rights-of-way and rights used or usable in connection
with the Premises or as a means of access thereto, including, without
limiting the generality of the foregoing, all rights pursuant to any
trackage agreement and all rights pursuant to all covenants, conditions and
restrictions and reciprocal easement agreements, all rights to the non-
exclusive use of common drive entries, all water and water rights, all air
rights, all development rights, and all mineral, mining, oil and gas rights
and rights to produce or share in the production of anything related
thereto, together with all tenements, hereditaments and appurtenances
thereof and thereto;
(vi) Any land lying, within the right-of-way of any street, open or
proposed, adjoining the Premises, and any and all sidewalks, alleys, and
strips and gores of land adjacent to or used in connection with the
Premises;
(vii) All leasehold estates, all ground leases, leases or subleases
covering the Premises or any portion thereof now or hereafter existing or
entered into (collectively, the "Leases"), and all right, title and
interest of Mortgagor thereunder, including all guaranties thereof, all
cash or security deposits, prepaid rentals, and all deposits or payments of
a similar nature;
(viii) All plans, specifications, maps, surveys, studies, reports,
franchises, permits, licenses, authorizations, trademarks, logos,
architectural, engineering and construction contracts, guaranties,
warranties and other undertakings covering the quality of performance of
work or material under the forgoing, contracts and an other contract rights
or claims, the deposits made by mortgagor pursuant to PARAGRAPH 3.1 and any
-------------
account in which such deposits are held, books of account, general
intangibles, accounts, inventories and supplies, causes of action, proceeds
of insurance and any and all awards made as a result of a taking, by
eminent domain, or by any proceeding or purchase in lieu thereof, of the
whole or any part of the Property, including, without limitation, any award
resulting from a change of any streets (whether as to grade, access or
otherwise) and any award for severance damages, insurance policies, Leases,
and all other documents, of whatever kind or character, relating to the
use, development, occupancy, leasing, sale or operation of the Premises,
all of the Fixtures prior to the time they become so related to the
Premises that an interest in them arises under the real estate laws of the
State in which the Premises are located, and all other personal property
now or hereafter located in, upon or about or used in connection with the
Property, including, without limitation, the personal property described in
EXHIBIT B attached hereto and made a part hereof, together with all present
----------
and future attachments, accessions, replacements, substitutions and
additions thereto or therefor, and the cash and non-cash proceeds thereof
to the extent all of the above are owned by Mortgagor (collectively, the
"Personalty"); and
-2-
<PAGE>
(ix) All options to purchase or lease the Premises or any other Property,
or any portion thereof or interest therein, in and to any greater estate in
the Premises or any other Property.
TO HAVE AND TO HOLD the Property unto Mortgagee, its successors and assigns
forever, subject only to the Permitted Exceptions (as hereinafter defined),
together with the rights, privileges, and appurtenances thereto belonging
to Mortgagor FOR THE PURPOSE OF SECURING the following obligations
(collectively, the "Obligations"):
(i) Payment of and performance of all covenants, obligations and
agreements of Mortgagor arising under or in connection with the Note, this
Mortgage or any other Loan Document (as hereinafter defined);
(ii) All renewals, extensions, amendments, modifications, consolidations
and changes of, or substitutions or replacements for, all or any part of
the items described under clause (i) immediately above; and
(iii) Payment of all sums advanced and costs and expenses incurred by
Mortgagee to protect and preserve the Property and the lien and security
interests created herein or in connection with the items described under
clauses (i) and (ii) immediately above or any part thereof, or for the
acquisition or perfection of the security therefor, whether made or
incurred at the request of Mortgagor or Mortgagee, including reasonable
attorneys' fees and court costs advanced or incurred by Mortgagee to
protect or preserve the Property or the validity or priority of this
Mortgage.
IN FURTHERANCE OF THE FOREGOING, Mortgagor hereby warrants,
represents, covenants and agrees as follows:
ARTICLE 1 DEFINITIONS
As used in this Mortgage, the following terms shall have the following meanings:
1.1 APPLICATION: The First Mortgage Loan Application, dated June 27, 1997,
-------------
executed by Mortgagor, which includes the mortgage loan conditions
incorporated therein.
1.2 ASSIGNMENT OF AGREEMENTS: That certain Assignment of Agreements of even
--------------------------
date herewith executed by Mortgagor in favor of Mortgagee.
1.3 ASSIGNMENT OF LEASES AND RENTS: That certain Assignment of Leases and
-------------------------------
Rents of even date herewith executed by Mortgagor in favor of Mortgagee.
-3-
<PAGE>
1.4 COLLATERAL: As defined in PARAGRAPH 6.1 hereof.
------------ -------------
1.5 CERTIFICATE OF REPRESENTATIONS AND WARRANTIES: That certain Certificate of
----------------------------------------------
Representations and Warranties of even date herewith executed by Mortgagor
in favor of Mortgagee.
1.6 DEBT SERVICE COVERAGE: As defined in PARAGRAPH 2.13 hereof.
---------------------- ---------
1.7 DEFAULT Rate: As defined in the Note.
-------
1.8 ERISA: means the Employee Retirement Income Security Act of 1974, as
-------
amended from time to time.
1.9 ERISA AGREEMENT: That certain ERISA Certificate and Indemnification
-----------------
Agreement of even date herewith executed by Mortgagor and Guarantor in
favor of Mortgagee.
1.10 EVENT OF DEFAULT: As defined in Article 4 hereof.
------------------ ---------
1.11 FIXTURES: All fixtures (other than any tenant's personal property except
----------
to the extent Mortgagor or any Principal Party has any ownership interest
therein and then only to the extent of such ownership interest) located
upon or within the Improvements or now or hereafter installed in, or used
in connection with, any of the Improvements, including any and all
machinery, equipment, appliances and fixtures, attachments, furniture,
furnishings, carpets, fire sprinklers, alarm systems and other articles of
a similar nature, whether or not permanently affixed to the Premises.
1.12 HAZARDOUS SUBSTANCES AGREEMENT: That certain Hazardous Substances
-------------------------------
Remediation and Indemnification Agreement of even date herewith executed
by Mortgagor and Guarantor, in favor of Mortgagee.
1.13 IMPOSITIONS: All real estate and personal property and other taxes and
------------
assessments (other than taxes paid directly by Mortgagee in accordance
with Section 2.4B hereof), and any and all other charges, expenses,
------------
payments, claims, broker's, manager's, mechanics' or material suppliers'
liens or assessments of any kind or nature whatsoever, whether general or
special, ordinary or extraordinary, foreseen or unforeseen, public or
private, that at any time prior to or after the execution of the Loan
Documents may be measured, assessed, levied, imposed, or become a lien
upon the Property or any interest therein or any part thereof, including
the Rents, (ii) any use or occupancy of the Property, (iii) this
transaction, or (iv) any document to which Mortgagor or any Principal
Party is a party that creates or transfers an interest or an estate in all
or any part of the Property.
1.14 IMPROVEMENTS: As defined in the granting paragraph of this Mortgage.
-------------
-4-
<PAGE>
1.15 INDEBTEDNESS: The indebtedness evidenced by the Note (including, without
--------------
limitation, any prepayment premium due thereunder) and any extensions,
modifications or renewals thereof, whether or not evidenced by a new or
additional promissory note or notes, and all other amounts due from
Mortgagor to Mortgagee hereunder or evidenced and/or secured by the Loan
Documents, plus interest on all such amounts as provided in the Loan
Documents.
1.16 LAWS AND RESTRICTIONS: All laws, regulations, codes, ordinances, rules,
-----------------------
statutes and policies, orders or judgments of any court or governmental
authority, restrictive covenants and other title encumbrances, permits,
authorizations and approvals, relating or applying to the development,
occupancy, ownership, management, use, and/or operation of the Property or
otherwise affecting the Property or Mortgagor.
1.17 LEASES: As defined in the granting paragraph of this Mortgage.
-------
1.18 LOAN: The loan from Mortgagee to Mortgagor evidenced by the Note.
------
1.19 LOAN TO VALUE RATIO: As defined in PARAGRAPH 2.13 hereof.
-------------------- --------------
1.20 LOAN DOCUMENTS: The Note, this Mortgage, the Application, the Assignment
----------------
of Agreements, the Assignment of Leases and Rents, the ERISA Agreement,
the Certificate of Representations and Warranties, the Hazardous
Substances Agreement and all other documents evidencing, securing or
relating to the Loan, the payment of the Indebtedness or the performance
of the Obligations.
1.21 MAJOR TENANT: Cassidy, Schade & Gloor; Tetra Pak, Inc.; Skadden, Arps,
-------------
Slate, Meagher; Urban Investment & Development; Federal Home Loan
Mortgage; Burditt & Radzius; Barack Ferrazzano Kirschbaum; Arbor Office
Suites; and John Nuveen & Co., for so long as such entity is a tenant on
the Property.
1.22 MATERIAL ADVERSE CHANGE: Any material and adverse change in (i) the
------------------------
financial condition of Mortgagor or any Principal Party (if such change
would materially adversely affect the ability of Mortgagor to perform its
obligations hereunder and under the Loan Documents or the ability of such
party to perform under any Loan Document to which it is a party), (ii) the
condition, use or operation of the Property, or (iii) Debt Service
Coverage resulting in a Debt Service Coverage of 1.0 or less.
1.23 NOTE: As defined in the granting paragraph of this Mortgage, together with
-----
any modifications, renewals or extensions thereof.
1.24 OBLIGATIONS: As defined in the securing paragraph of this Mortgage.
------------
1.25 PERMITTED EXCEPTIONS: All of those title exceptions set forth in the title
---------------------
insurance policy in favor of the Mortgagee that insures the priority of
this Mortgage.
-5-
<PAGE>
1.26 PERSON: Any natural person, corporation, partnership, limited liability
-------
company, firm, association, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
1.27 PERSONALTY: As defined in the granting paragraph of this Mortgage.
-----------
1.28 PREMISES: As defined in the granting paragraph of this Mortgage.
----------
1.29 PRINCIPAL PARTY: Each of Mortgagor, any parent company of Mortgagor or any
-----------------
owner of the Property, or any guarantor or surety of Mortgagor's
obligations under THE Loan Documents (collectively "PRINCIPAL PARTIES").
As to Overseas Partners (333), Inc., "Principal Party" shall include only
Mortgagor and Overseas Partners Capital Corp., a Delaware corporation
("Guarantor").
1.30 PROPERTY: As defined in the granting paragraph of this Mortgage.
---------
1.31 RECEIVER: Any trustee, receiver, custodian, fiscal agent, liquidator or
----------
similar officer.
1.32 RENTS: As defined in the granting paragraph of this Mortgage.
------
1.33 TRANSFER: The occurrence of (i) any voluntary or involuntary sale,
----------
conveyance, assignment, transfer, alienation, mortgage, conveyance of
security or title, encumbrance or other disposition of the Property or any
part thereof or any interest therein, of any kind, or any other transaction
the result of which is, directly or indirectly or voluntarily or
involuntarily, to divest Mortgagor of its title to the Property or any
interest therein, (ii) any merger, consolidation or dissolution involving,
or the sale or transfer of all or substantially all of the assets of,
Mortgagor or any general partner of a partnership Mortgagor, (iii) the
transfer (at one time or over any period of time) of twenty-five percent
(25 %) or more of (a) the voting stock of (1) a corporate Mortgagor, (2)
any corporate general partner of a partnership Mortgagor or (3) any
corporation which is the direct or indirect owner of twenty-five percent
(25%) or more of the voting stock of a corporate Mortgagor or any corporate
general partner of a partnership Mortgagor, or (b) the beneficial interest
in Mortgagor, or the interest in any Person who owns fifty percent (50%) or
more of the beneficial interest in Mortgagor, if a trust, or (c) the
ownership interests of Mortgagor if Mortgagor is a limited liability
company, (iv) the transfer of any general partnership interest in a
partnership Mortgagor or in any partnership which is a direct or indirect
general partner of a partnership Mortgagor, or (v) the conversion of any
general partnership interest in a partnership Mortgagor to a limited
partnership interest.
-6-
<PAGE>
ARTICLE 2 COVENANTS
Mortgagor hereby covenants and agrees as follows:
2.1 OBLIGATIONS OF MORTGAGOR. Mortgagor will pay when due and otherwise timely
--------------------------
perform, or cause to be timely performed, all the Obligations.
2.2 MAINTENANCE OF CURRENT STATUS. Mortgagor will maintain in good standing
-----------------------------
its existence, franchises, rights and privileges under the laws of the
State pursuant to which it was organized and will maintain its right to
transact business in the State in which the Premises are located.
Mortgagor will not, (i) without Mortgagee's prior written consent,
terminate, alter, modify or amend or permit the termination, alteration,
modification or amendment of its organizational documents, including its
partnership agreements, statement of partnership, trust agreement, articles
of incorporation, by-laws, articles of organization, or operating
agreement, as applicable, in any way which would adversely affect (a)
Mortgagor's ability to perform its obligations hereunder, or (b) the
security provided hereby, (ii) change its name, the address of its
principal offices or the name under which it conducts business without
promptly notifying Mortgagee in writing of such change, or (iii) without
Mortgagee's prior written consent reorganize or change its legal structure,
except in connection with a Permitted Transfer. In the event Mortgagor is
entitled to make any of the above modifications without Mortgagee's
consent, Mortgagee shall notify Mortgagor of such modification.
2.3 MAINTENANCE, WASTE AND REPAIR. Mortgagor will maintain the Property,
-----------------------------
including the parking, recreational and landscaped parts thereof, in good
and safe order, repair and operating condition, promptly make all necessary
repairs, renewals, replacements, additions and improvements thereto,
interior and exterior, structural and non-structural, foreseen or
unforeseen or otherwise necessary to insure that the security granted
hereunder and under the Loan Documents shall not in any way be diminished
or impaired. Mortgagor will not (i) diminish or materially alter the
Improvements (other than improvements made by tenants in the ordinary
course of business), nor erect any new buildings, structures or building
additions on the Land, without the prior written consent of Mortgagee, (ii)
remove or permit to be removed any of the Fixtures or other Personalty from
the Premises without the prior written consent of Mortgagee unless replaced
by articles of equal suitability and value owned by Mortgagor free and
clear of any lien or security interests and in such a manner that the
replacement or substituted article is subject to the security interests
created hereby, it being understood and agreed that all replacements,
substitutions and additions of and to the Property shall be and become
immediately subject to the lien of this Mortgage and covered hereby, (iii)
permit any waste, misuse or deterioration of the Property or make any
change in the use thereof, nor do or permit to be done
-7-
<PAGE>
thereon anything, that may in any way impair the security of this Mortgage,
or (iv) abandon all or any part of the Property. Mortgagor or an affiliate
of Mortgagor will, at all times, directly and exclusively manage the
Property itself or use a management company that is approved by Mortgagee
to do so.
2.4 IMPOSITIONS AND OTHER TAXES.
---------------------------
A. Mortgagor will pay, when due, all Impositions, including utility
charges and all claims and demands of brokers, managers, mechanics,
materialmen, laborers and others which, if unpaid, might result in, or
permit the creation of, a lien or encumbrance on all or any part of the
Property or the Rents. Payment of Impositions shall not be deferred
through any financing program or other deferral option offered by any
taxing authority except as assessments may be paid over time if so provided
by the terms of the assessment without penalty or additional interest of
any kind and without foregoing the ability to receive a discount on any
such assessments by paying the same in one installment. Mortgagor will
provide to Mortgagee receipts or other sufficient evidence of payment of
Impositions within ten (10) days of Mortgagee's request therefore If
Mortgagor is making deposits for Impositions into a Depository pursuant to
Paragraph 2.10.A., Mortgagor shall furnish to Mortgagee, immediately upon
-----------------
receipt, copies of all bills for and notices of all such Impositions.
Notwithstanding the foregoing, Mortgagor may, at its expense and before any
delinquency occurs or lien as a result of Mortgagor's failure to pay
Impositions is imposed or accrues, contest the amount or validity or
application of any such Impositions by appropriate legal proceedings
promptly initiated and conducted in good faith and with due diligence,
provided that Mortgagee receives prior written notice of Mortgagor's
interest to so contest or object to an Imposition and is reasonably
satisfied that (i) neither the Property nor any part thereof or interest
therein will be in danger of being foreclosed upon, sold, forfeited,
terminated, canceled, or lost as a result of such contest, and (ii)
Mortgagor shall have posted a bond or furnished such other security as may
be required from time to time by Mortgagee and as is reasonably
satisfactory to Mortgagee in form and in amount. Mortgagor shall
indemnify, defend, protect and hold Mortgagee harmless from all loss,
liability, cost or expense by reason of such contest, including reasonable
attorneys' fees and expenses incurred by Mortgagee. In any event, any
Imposition contested hereunder shall be paid and fully discharged by
Mortgagor or such amount escrowed with Mortgagee in an interest bearing
account within five (5) days after entry of any judgment adverse to
Mortgagor in any action to enforce or foreclose the same (regardless of the
pendency of a stay of execution in connection with any appeal undertaken by
Mortgagor), or at any time when such payment or discharge is necessary in
order to prevent loss of control or dispossession of Mortgagor from the
Property or any part thereof.
B. Mortgagor will pay all taxes (excluding income, franchise and doing
business taxes), assessments, charges, expenses., costs and fees (including
registration and
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recording fees and mortgage taxes) levied on, assessed against or incurred
by Mortgagee in connection with any of the Loan Documents. Mortgagor will
also pay all stamp and other similar taxes required to be paid in
connection with the Obligations.
C. In the event of the enactment of or change (including a change in
interpretation) of any applicable law, in any manner changing or modifying
the laws governing (i) the taxation of mortgages, deeds of trust or other
security instruments or the debts secured thereby, or (ii) the manner of
collecting such taxes, so as to adversely affect Mortgagee, this Mortgage
or any other Loan Document or the Indebtedness, Mortgagor will promptly pay
any such tax and otherwise compensate Mortgagee to the extent of such
detriment; provided, however, that if (a) Mortgagor fails to make such
payment, or (b) any such law prohibits Mortgagor from making such payment,
or (c) any such law would penalize Mortgagee in the event of such payment,
then the entire principal balance of the Indebtedness, together with all
interest accrued thereon and any and all other sums secured by this
Mortgage shall, with notice, become immediately due and payable at the
option of Mortgagee, without any penalty for prepayment in the case of (b)
or (c), above.
2.5 COMPLIANCE WITH LAW. Mortgagor will promptly and faithfully comply with,
--------------------
and cause the Property to be maintained, used and operated in accordance
with, all present and future Laws and Restrictions. If Mortgagor receives
any notice that Mortgagor or the Property is in default under or not in
compliance with any present or future Laws and Restrictions, or receives
notice of any proceeding initiated under or with respect to such default or
non-compliance, Mortgagor will promptly furnish a copy of such notice to
Mortgagee.
2.8 BOOKS AND RECORDS, ANNUAL OPERATING, STATEMENTS, FINANCIAL STATEMENTS RENT
--------------------------------------------------------------------------
ROLL AND OTHER INFORMATION.
--------------------------
A. Mortgagor, without expense to Mortgagee, will maintain full and
complete books of account and records reflecting the operation of the
Property. Mortgagor will keep at its offices at the Property, and make
available to Mortgagee during normal business hours, all such books and
records and the "as-built" plans and specifications or, if unavailable, the
final set of plans and specifications from which the Improvements were
constructed certified by a licensed architect or licensed contractor as
true, correct and complete.
B. Within one hundred twenty (120) days after the close of each calendar
year, Mortgagor shall furnish to Mortgagee (i) annual operating statements
showing all elements of income and expense for the operation of the
Property, (ii) financial statements of each Principal Party and each Major
Tenant (to the extent that the Major Tenant's lease requires them to
provide such information to Mortgagor, provided however, that the failure
of a Major Tenant to provide such statement to
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Mortgagor and Mortgagor's corresponding failure to provide such statements
to Mortgagee, shall not be an Event of Default hereunder or under any of
the Loan Documents), and (iii) current rent rolls, showing all items set
forth in the rent rolls delivered to Mortgagee in connection with the
closing of the Loan, as well as gross sales of any tenant paying percentage
rental. Mortgagor will promptly furnish to Mortgagee such other financial
information concerning the condition of Mortgagor, any Principal Party and
the Property, and all other information concerning the Property or the
performance by Mortgagor of the Obligations, that Mortgagee may reasonably
request. All such statements and information shall be prepared in
accordance with generally accepted accounting principles and certified by
an authorized person, partner or officer. In the event any such operating
statement, financial statement, rent roll or other information is not
timely submitted to Mortgagee, and remains unsubmitted for thirty (30) days
after Mortgagee notifies Mortgagor, a service fee of $500.00 shall
automatically become due and payable to Mortgagee and be secured by this
Mortgage. This charge shall be in addition to all other rights and
remedies available to Mortgagee upon the occurrence of an Event of Default.
C. Mortgagee and its representatives shall have the right, at all
reasonable times and upon reasonable notice, to examine and make copies of
Mortgagor's plans, books, records, income tax returns and all supporting
data concerning the Property. Mortgagor will assist Mortgagee and its
representatives in conducting such examination.
D. Mortgagor acknowledges that Mortgagee may intend to request that a
rating agency provide a rating of the Loan. Mortgagor agrees that, at
Mortgagee's request, Mortgagor will prepare or cause to be prepared
additional financial statements in respect of the Property, Mortgagor
and/or the general partners of Mortgagor, that a rating agency may
reasonably require in connection with any such rating and which such rating
agency customarily requires in connection with commercial loan ratings for
similar properties, provided that Mortgagor shall not be required to incur
additional expense or liability in connection with rating the Loan. The
form of such financial statements shall be acceptable to such rating agency
and to Mortgagee.
2.7 FURTHER ASSURANCES. Mortgagor will do all acts necessary to keep valid
------------------
and effective the lien of this Mortgage and to carry into effect its
objectives and to protect the lawful owner of the Note and the other
Obligations. Mortgagor at any time upon the reasonable request of
Mortgagee, will at it sole expense, execute, acknowledge and deliver all
such additional papers and instruments (provided that any such additional
papers and instruments will reflect the limitation of personal liability
contained in Section 7.30 hereof) and perform all such further acts as may
------------
be reasonably necessary to perform the Obligations and, as Mortgagee deems
reasonably necessary, to preserve the priority of the lien of this Mortgage
or to carry out the purposes of the Loan Documents, provided that the same
shall not diminish Mortgagor's rights or
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increase Mortgagor's Obligations hereunder or under any of the Loan
Documents. Without limiting the generality of the foregoing, Mortgagor
will promptly and, insofar as not contrary to applicable law, at
Mortgagor's own expense, execute, record, rerecord, file and re-file in
such offices, at such times and as often as may be necessary, this
Mortgage, additional mortgages or deeds of trust, and every other
instrument in addition to or supplemental hereto, including applicable
financing statements, as may be necessary to create, perfect, maintain and
preserve the liens, encumbrances and security interests intended to be
created by the Loan Documents and the rights and remedies of Mortgagee
thereunder. Upon request by the Mortgagee, Mortgagor will promptly supply
evidence of fulfillment of the foregoing acts and assurances.
2.8 DEFENSE OF TITLE AND LITIGATION. Mortgagor will forever warrant and defend
-------------------------------
its title to the Property and the validity, enforceability and priority of
the lien and security interests created hereby against the claims and
demands of all Persons. If the lien or security interests created by this
Mortgage or any of the other Loan Documents, or the validity,
enforceability or priority thereof, or title or any of the rights of
Mortgagor or Mortgagee in or to the Property, shall be endangered or
questioned, or shall be attacked directly or indirectly, or if any action
or proceeding is instituted against Mortgagor or Mortgagee with respect
thereto, Mortgagor will promptly notify Mortgagee thereof and will
diligently use its best efforts to cure any defect so asserted. In so
doing, Mortgagor will take all necessary and proper steps for the defense
of such action or proceeding, including the employment of counsel, the
prosecution or defense of litigation and, subject to Mortgagee's approval,
the compromise, release or discharge of any and all adverse claims.
Mortgagee (whether or not named as a party to such actions or proceedings)
is entitled (but shall not be obligated) to take such additional steps as
it may deem necessary or proper for the defense of any such action or
proceeding or the protection of the lien, security interest, validity,
enforceability or priority of this Mortgage or any other Loan Document or
of such title or rights, including the employment of counsel, the
prosecution or defense of litigation, the compromise, release or discharge
of such adverse claims and the removal of such prior liens and security
interests.
2.9 INSPECTION OF PROPERTY. Mortgagor hereby grants to Mortgagee, its agents,
----------------------
employees, consultants and contractors, the right, subject to the rights of
tenants under the Leases, to enter upon the Property, at all reasonable
times and upon reasonable notice, for the purpose of making any and all
inspections, reports, inquiries reviews and tests (such tests to be
undertaken by Mortgagee at Mortgagee's cost) only after an Event of Default
has occurred), as Mortgagee (in its sole and absolute discretion) deems
necessary to assess the then current condition of the Property, or for the
purpose of performing any of the other acts Mortgagee is authorized to
perform hereunder or under the Hazardous Substances Agreement. Mortgagor
will cooperate with Mortgagee to facilitate such entry and the
accomplishment of such purposes.
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2.10 TAX AND INSURANCE DEPOSITS.
--------------------------
A. Mortgagee may, at any time after (i) an Event of Default has occurred
(whether or not subsequently waived or then-existing), or (ii) the Debt
Service Coverage as determined by Mortgagee falls below 1.1 to 1.0, require
for the balance of the term of the Note that Mortgagor deposit with
Mortgagee or any service or financial institution designated by Mortgagee
pursuant to PARAGRAPH 2.10.F. hereof (collectively, "Depository"),
------------------
monthly, one-twelfth (1/12) of the annual Impositions and the premiums for
all insurance policies required hereunder, and Mortgagor will make all such
required deposits; Mortgagor will also deposit with the Depository a sum of
money which, together with the aforesaid monthly installments, will be
sufficient to make each of said payments of Impositions and, if required,
premiums at least thirty (30) days before such payments are due. If the
amount of any such payments is not ascertainable at the time any such
deposit is required to be made, the deposit will be made on the basis of
Mortgagee's reasonable estimate thereof, and, when such amount is fixed for
the then-current year, Mortgagor will promptly deposit any deficiency with
the Depository. Notwithstanding the foregoing, in the event that monthly
deposits on account of Impositions become due under clause (ii), above,
Mortgagee shall notify Mortgagor of the same, and, if Mortgagor does not
deposit such Impositions with Depository within thirty (30) days after
Mortgagee's notice, Guarantor shall be deemed to have assumed personal
liability for the payment of all Impositions. At any time after Guarantor
has been deemed to assume such personal liability, Mortgagor and Guarantor
shall have the right to deposit the Impositions with Depository and,
thereafter, Guarantor shall no longer be personally liable for the
Impositions until such time as Mortgagor again fails to pay Impositions as
above promised.
B. All funds so deposited will, until so applied, constitute additional
security for the Obligations, will be held by the Depository without
interest (except to the extent required under applicable law), and may be
commingled with other funds of the Depository. Provided that no Event of
Default shall exist, all such funds will be applied in payment of the
annual Impositions and insurance premiums, but only to the extent that the
Depository shall have such funds on hand. Notwithstanding the foregoing,
Depository shall have no obligation to use said funds to pay (i) any of the
annual Impositions and insurance premiums unless Mortgagor shall have
furnished the Depository with the bills or invoices therefor in sufficient
time to pay the same before any penalty or interest attaches and before
said policies of insurance lapse, as the case may be, (ii) any installment
of Impositions prior to the last day on which payment thereof may be made
without penalty or interest, or (iii) any insurance premium prior to the
due date thereof, provided however, that if any penalty, interest, or
additional charges are incurred as a result of Mortgagor's failure to
provide bills or invoices as above required, Mortgagor shall provide
Depository with any additional funds required, and Depository shall pay the
annual Impositions plus any interest or penalty. If an Event of Default
shall exist (whether or not the Obligations have been
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<PAGE>
accelerated as herein provided), all funds so deposited may, at Mortgagee's
option, be applied to the Obligations in the order determined by Mortgagee,
including the unperformed Obligation which resulted in the then existing
Event of Default, or to pay the Impositions and insurance premiums as
provided above. In no event shall Mortgagor be entitled to claim any
credit against the principal and interest due under the Note for any
payment or deposit for taxes or insurance, unless Mortgagor applies the
same to principal and/or interest after an Event of Default.
C. Mortgagee, in making any payment authorized by this Mortgage (i)
relating to taxes and assessments, may do so according to any bill,
statement or estimate procured from the appropriate public office without
inquiring into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof, or (ii) for the purchase, discharge, compromise or
settlement of any other prior lien, may do so without inquiring as to the
validity or amount of any claim or lien which may be asserted.
D. Upon an assignment or other transfer of this Mortgage, the Depository
shall have the right to pay over the balance of such deposits in its
possession to the assignee or other successor, and the Depository and
Mortgagee shall thereupon be completely released from all liability with
respect to such deposits. In such event, Mortgagor and any successor owner
of the Property shall look solely to the assignee or transferee with
respect to such deposits. This provision shall apply to every transfer of
such deposits to a new assignee or transferee.
E. Subject to the restrictions on Transfers herein, transfer of record
title to the Premises and any other Property shall automatically transfer
to the new owner the beneficial interest in any deposits under this
PARAGRAPH 2.10. Upon full payment and satisfaction of the Note or, at
--------------
Mortgagee's option, at any prior time, the balance of such amounts in the
Depository's possession shall be paid over to the record owner of the
Property, and no other party shall have any right or claim thereto.
F. At Mortgagee's request, Mortgagor agrees to make the aforesaid deposits
in an account with such service or financial institution as Mortgagee may
from time to time designate in lieu of Mortgagee, and the reasonable fees
and costs of such institution shall be borne by Mortgagor.
2.11 TAX SERVICE CONTRACT. Throughout the term of the Loan, Mortgagee will
--------------------
purchase tax service contracts issued by a tax reporting agency
satisfactory to Mortgagee to monitor the payment of all real estate taxes
and assessments relating to the Property, and Mortgagor shall pay to
Mortgagee a one-time fee not to exceed $6,600.00 to cover the cost of such
service.
2.12 ZONING AND OTHER TITLE MATTERS. Mortgagor will not, without the prior
------------------------------
written consent of Mortgagee, (i) suffer, permit, initiate, support, join
in, or consent to any
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<PAGE>
change in the current use of the Premises or in any zoning ordinance,
private restrictive covenant, assessment proceedings or other public or
private restriction limiting or restricting the uses that may be made of
the Premises or any part thereof, (ii) change the boundaries of the
Premises, or initiate, support, join in or consent to the annexation of the
Premises to any municipality, (iii) impose any restrictive covenants or
encumbrances upon the Premises or otherwise modify, amend or supplement, or
do anything that may result in the modification, amendment or
supplementation of, the Permitted Exceptions, or (iv) permit the Premises
to be used by the public or any Person in such manner as to make possible a
claim of adverse usage or possession or of any implied dedication or
easement by prescription.
2.13 DUE ON SALE OR ENCUMBRANCE.
--------------------------
A. Except as expressly permitted below, Mortgagor will not cause, allow,
or permit a Transfer without the prior written consent of Mortgagee, which
consent may be withheld for any reason or no reason, or given
conditionally, in Mortgagee's sole and absolute discretion. If a Transfer
occurs without the foregoing consent of Mortgagee, then such event shall
constitute an Event of Default under the Loan Documents and the entire
balance of the Loan, including all accrued interest and any other sums
secured hereby, together with the Prepayment Premium (as defined in the
Note) shall become immediately due and payable. Any permitted transferee
shall, as a condition of the effectiveness of any consent or waiver by
Mortgagee hereunder, assume all of Mortgagor's obligations and rights under
the Loan Documents (including the limitation of personal liability) and
agree to be bound thereby. Unless the provisions of SECTION B(VIII),
---------------
below, are satisfied, such assumption shall not, however, release Mortgagor
or any Principal Party from any liability under the Loan Documents. This
provision shall not apply to transfers of title or interest under any will,
applicable law of descent, or transfers of limited partnership interests.
Consent to any Transfer by Mortgagee shall not be deemed a waiver of
Mortgagee's right to require such consent to any further or future
Transfers.
B. Notwithstanding the foregoing, if no Event of Default, or event which
with the passage of time or the giving of notice or both would constitute
an Event of Default, has occurred and is continuing, Mortgagee agrees, upon
written request of Mortgagor, to consent to one and only one transfer of
the entire Property (including all parcels and related collateral for the
Loan) if:
(i) any proposed transferee of the Property (or a guarantor of the
recourse carveouts following such transfer) is a person which is reasonably
satisfactory to Mortgagee; and
(ii) after the transfer, the Property will be managed by transferee, if
such transferee has management experience, or by a manager approved by
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Mortgagee, pursuant to a management agreement for a term and on terms
approved by Mortgagee; and
(iii) at the time of transfer the Loan to Value Ratio (as hereinafter
defined) does not exceed 59.5%; and
(iv) Mortgagee has received thirty (30) days prior written notice from
Mortgagor of the proposed transfer; and
(v) Mortgagor has paid Mortgagee a servicing fee (not to exceed $10,000)
for consideration by Mortgagee of the request at the time Mortgagor makes
such request, which shall be deemed earned by Mortgagee even if such
request is denied, and an additional fee (against which said servicing fee
shall be credited) equal to one-half percent (0.5%) of the outstanding
principal balance of the Loan at the time of the transfer; and
(vi) at Mortgagee's option, Mortgagee has received an endorsement to
Mortgagee's title policy at Mortgagor's expense, which endorsement states
that the Mortgage remain a first and prior lien against the Property; and
(vii) Debt Service Coverage (as hereinafter defined) is equal to or
greater than 1.63 to 1.00 for the preceding twelve (12) month period, and
Mortgagee has no reason to believe that such Debt Service Coverage will not
be maintained for the next succeeding twelve (12) months; and
(viii) any transferee of the Property expressly assumes the indebtedness
under the Note and all other obligations under the Loan Documents (subject
to the limitation on liability set forth in PARAGRAPH 7.30 below), pursuant
---------------
to documents satisfactory in form and substance to Mortgagee, and following
any transfer of the Property, Guarantor (or a substitute guarantor) has
GAAP net worth (plus accumulated depreciation) reasonably satisfactory to
Mortgagee and affirms or reaffirms its obligations to Mortgagee under the
Loan Documents by documentation in form and substance satisfactory to
Mortgagee (at which time Guarantor will be released from further
liability); and
(ix) the transferee executes such documents as may required by Mortgagee
to perfect or maintain perfection of a first priority security interest in
the Personalty; and
(x) Mortgagee has received copies of all documents evidencing such
transfer and reasonably approved the form and content of all such
documents, and Mortgagee is furnished with a certified copy of the recorded
transfer document; and
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<PAGE>
(xi) such transfer is permitted under the provisions of the ERISA
Certificate and Indemnification Agreement; and
(xii) Mortgagor pays all reasonable costs and expenses incurred by
Mortgagee in connection with such transfer, including all legal,
accounting, title insurance and appraisal fees, whether or not such
transfer is actually consummated.
The term "Loan to Value Ratio" shall mean the ratio of (x) the aggregate
principal balance of all debt against the Property to (y) the purchase price of
the Property.
The term "Debt Service Coverage" shall mean a ratio calculated by dividing (1)
net operating income ("NOI") by (2) total annual debt service ("TADS"). NOI is
the gross annual income realized from operations of the Premises for the
applicable twelve (12) month period, subtracting therefrom all necessary and
ordinary operating expenses (both fixed and variable) for such twelve (12) month
period (assuming the Premises are ninety percent (90%) leased and occupied if
the actual leasing status of the Premises are less than ninety percent (90%),
including, but not limited to, utilities, administrative, cleaning, landscaping,
security, repairs and maintenance, ground rent payments, management fees, real
estate and other taxes, assessments and insurance, but excluding therefrom
deductions for federal, state and other income taxes, debt service expense,
depreciation or amortization of capital expenditures and other similar non-cash
items. Gross income shall not be anticipated for any greater time period than
that approved by generally accepted accounting principles nor shall ordinary
operating expenses be prepaid. Documentation of NOI and expense shall be
certified by an officer of Mortgagor with detail satisfactory to Mortgagee and
shall be subject to the reasonable approval of Mortgagee. TADS shall mean the
aggregate debt service payments for any given calendar year on the Loan and on
all other indebtedness secured, by a lien on all or any part of the Property.
C. For purposes of this paragraph C, Mortgagor shall include any transferee of
the original Mortgagor, pursuant to paragraph B above. Notwithstanding anything
contained to the contrary in any other provision of this Mortgage, no default or
Event of Default shall be created under any Loan Document as a result of any
transfer of (a) the Property to a single-purpose entity legally similar to
Mortgagor, or (b) any voting stock of a corporate Mortgagor or a corporate
general partner of Mortgagor, or (c) the voting stock of any corporation which
is the direct or indirect owner of any of the voting stock of a corporate
Mortgagor or of any corporate general partner of Mortgagor, or (d) any
beneficial interest in Mortgagor or any interest in any owner of a beneficial
interest in Mortgagor, if a trust, or (e) any ownership interest in a limited
liability company Mortgagor, or (f) any partnership interest in Mortgagor or in
any partnership which is a direct or indirect partner of Mortgagor under any one
or more of the following circumstances:
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<PAGE>
(i) any transfer resulting from the death of a natural person, or
(ii) any transfer by a natural person to a spouse, son or daughter or
descendant of either, or a stepson or stepdaughter or descendant of either,
or
(iii) any transfer by a natural person in connection with bona fide estate
planning, or
(iv) any transfer to Guarantor or to Overseas Partners, Ltd. or to any
entity controlling, controlled by or under common control with Guarantor,
Overseas Partners, Ltd. or Mortgagor, or to any combination of the
foregoing.
2.14 NO COOPERATIVE OR CONDOMINIUM. Mortgagor will not operate the Premises or
-----------------------------
permit the Premises to be operated as a cooperative or condominium or
otherwise such that the tenants or other occupants thereof participate in
ownership, control, or management of the Premises or any part thereof, as
tenant stockholders or otherwise.
2.15 INSURANCE.
---------
A. Mortgagor, at its sole cost and expense, will keep and maintain for the
mutual benefit of Mortgagor and Mortgagee the following policies of
insurance and shall faithfully comply with the provisions thereof: (i)
insurance against loss or damage to the Property by fire and other risks
covered by insurance commonly known as "all risk" coverage for real and
personal property, including endorsements for loss by flood if all or part
of the Premises are located within a federal or state designated flood
hazard zone or other flood zone area, "extra expense" coverage and "agreed
amount" coverage, and protection against such other risks or hazards as
Mortgagee from time to time reasonably may designate, in an amount equal to
one hundred percent (100%) of the then current "full replacement cost" of
the Improvements, the Fixtures and the other Personalty, without deduction
for physical depreciation; (ii) rental loss insurance against loss of
income in an amount equal to at least twelve (12) months' base and
additional rental, including charges for taxes, insurance, utilities and
other operating expense reimbursements or "pass-throughs" at then current
income levels; (iii) commercial general liability insurance for bodily
injury or death or property damage occurring in, upon or about, or
resulting from, the Premises or any other Property, or any street, drive,
sidewalk, curb or passageway adjacent thereto (but such coverage or the
amount thereof shall in no way limit the indemnifications in this Mortgage
and other Loan Documents), with a combined single limit in such amounts as
are reasonably approved by Mortgagee; (iv) "builders risk" insurance during
the period of any construction, repair, replacement, renovation or
alteration of the Improvements, in such amounts as are reasonably approved
by
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Mortgagee; (v) boiler and machinery insurance; and (vi) such other
insurance, and in such amounts, as may from time to time be reasonably
required by Mortgagee.
B. All policies of insurance required by this Mortgage (i) shall be
prepaid annually and otherwise satisfactory in form, substance and amount
to Mortgagee and written with an insurance company rated as "B+/Xll" or
better in Best's Insurance Reports, (ii) shall name Mortgagee as an
additional insured as its interest may appear, (iii) shall contain a
Standard Mortgagee clause acceptable to Mortgagee and a waiver of
subrogation rights by the insurer, (iv) shall contain an agreement by the
insurer that such policy shall not be amended or canceled without at least
thirty (30) days' prior written notice to Mortgagee, and (v) shall contain
such other provisions as Mortgagee deems reasonably necessary or desirable
to protect its interests. No approval by Mortgagee of any insurer shall be
construed to be a representation, certification or warranty of its solvency
and no approval by Mortgagee as to the amount, type and/or form of any
insurance shall be construed to be a representation, certification or
warranty of its sufficiency.
C. In the event a blanket policy is submitted to satisfy Mortgagor's
obligations under this PARAGRAPH 2.15, in addition to such other
--------------
requirements set forth herein, Mortgagor shall deliver to Mortgagee a
certificate from such insurer indicating that Mortgagee is an insured under
such policy and designating the amount of such insurance applicable to the
Property.
D. Mortgagor will furnish evidence, satisfactory to Mortgagee, that (i)
all insurance requirements (including provisions for waivers of
subrogation) set forth in the Leases or any other agreements affecting the
Property shall have been satisfied by each party thereto, (ii) Mortgagor's
insurance coverage is sufficient (assuming the total destruction of the
Property) to permit Mortgagor to rebuild the Improvements (including basic
tenant improvements) and to replace Personalty (including the Fixtures) in
such a manner as to enable the Property to be operable and rentable as it
is currently rented and operated, and (iii) each tenant, required by the
terms of its Lease to maintain insurance on its leased premises, has caused
Mortgagee to be named as an additional insured or loss payee under such
insurance policies.
E. Self-insurance (other than the applicable deductibles approved by
Mortgagee) shall not satisfy the requirements of this PARAGRAPH 2.15.
--------------
F. All of Mortgagor's right, title and interest in and to all policies of
insurance and any unearned premiums thereon are hereby assigned (to the
fullest extent assignable) to Mortgagee, and in the event of foreclosure of
this Mortgage, transfer pursuant to power of sale hereunder or other
transfer of title or assignment of the Premises and the other Property, all
right, title and interest of Mortgagor in and to all policies of insurance
required hereunder or otherwise then in force with respect thereto and all
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proceeds payable thereunder and any unearned premium thereon shall
immediately vest in the purchaser or other transferee of the Property.
G. Upon expiration of any policy furnished pursuant to this PARAGRAPH
---------
2.15, Mortgagor shall provide Mortgagee with certificates of renewal
----
policies together with evidence satisfactory to Mortgagee of Mortgagor's
payment of the applicable premiums.
H. Mortgagor for itself, and on behalf of its insurers, hereby releases
and waives any right to recover against Mortgagee on account of any
liability for: (i) any loss or damage to property, including the property
of any tenant or licensee of the Property; (ii) any loss or damage to the
Improvements; (iii) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is covered by the insurance
required to be carried hereunder by Mortgagor, or is otherwise insured or
required to be insured; or (iv) claims arising by reason of any of the
foregoing, irrespective of any negligence on the part of Mortgagee which
may have contributed to such loss or damage.
2.16 ESTOPPEL CERTIFICATES. Mortgagor, within ten (10) business days after
---------------------
Mortgagee's request, shall furnish to Mortgagee a written statement, duly
acknowledged, certifying to Mortgagee and/or any proposed assignee or
participant of the Loan as to (i) the outstanding amount of the
Indebtedness, (ii) the terms of payment and maturity date of the
Indebtedness, (iii) the date to which interest has been paid under the
Note, (iv) to the best of Mortgagor's knowledge, whether any offsets or
defenses exist against the Obligations and, if any are alleged to exist, a
detailed description thereof, (v) that, to the best of Mortgagor's
knowledge, all Leases are in full force and effect and have not been
modified (or if modified, setting forth all modifications), (vi) the date
to which the rent, additional rent and other charges thereunder have been
paid, (vii) whether or not, to the best knowledge of Mortgagor, any of the
lessees under the Leases are in default under the Leases, and, if any of
the lessees are in default, setting forth the specific nature of all such
defaults, and (viii) as to any other matters reasonably requested by
Mortgagee and reasonably related to the Leases, the Indebtedness, the
Obligations, the Property or this Mortgage or other Loan Documents.
Mortgagee, within ten (10) business days after Mortgagor's request, shall
furnish to Mortgagor, a written statement, duly acknowledged, certifying to
Mortgagor (a) the outstanding amount of the Indebtedness, (b) the terms of
payment and maturity date of the Indebtedness, (c) the date to which
interest has been paid under the Note, (d) whether, to the best of
Mortgagee's knowledge, any offsets or defenses exist against the
Obligations and, if any are alleged to exist, a detailed description
thereof, and (e) whether, to the best of Mortgagee's knowledge, there are
any Events of Default hereunder or under any of the Loan Documents.
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<PAGE>
2.17 HAZARDOUS MATERIALS.
-------------------
A. Hazardous Wastes and Substances. At its sole cost and expense,
-------------------------------
Mortgagor and Guarantor shall comply with all federal, state and local
laws, rules, regulations and orders with respect to the discharge,
generation, removal, transportation, storage and handling of hazardous or
toxic wastes or substances, pay immediately when due the cost of removal of
any such wastes or substances, and keep Property free of any lien imposed
pursuant to such laws, rules, regulations and orders. In the event
Mortgagor or Guarantor fails to do so, and such failure shall continue for
ten (10) days after notice from Mortgagee, Mortgagee may declare this
Mortgage to be in default. In addition, Mortgagor hereby grants Mortgagee
and its employees and agents an irrevocable and non-exclusive license,
subject to the rights of tenants, at all reasonable times and upon
reasonable notice, to enter the Property to inspect, and (upon the
expiration of the applicable cure period under this Mortgage) conduct
testing and remove the hazardous wastes or substances. The costs of such
inspection, testing and removal shall immediately become due to Mortgagee
and shall be secured by this Mortgage. Mortgagor and Guarantor, jointly
and severally, shall indemnify Mortgagee and hold Mortgagee harmless from
and against all loss, liability, damage, claim, judgment, cost and expense
(including, without limitation, attorneys' fees and costs incurred in the
investigation, defense and settlement of claims) that Mortgagee may incur
as a result of or in connection with the assertion against Mortgagee of any
claim relating to the presence or removal of any hazardous waste or
substance referred to in this PARAGRAPH 2.17.A., or compliance with any
-----------------
federal, state or local laws, rules, regulations or orders relating
thereto, provided, however, that this indemnity shall not apply if
Mortgagor can conclusively prove that (A) the contamination of the Property
was caused solely by actions, conditions, or events that occurred after the
date that Mortgagee (or any purchaser at a foreclosure sale) actually
acquired title to the Property and (B) the contamination of the Property
was not caused by the direct or indirect actions of Mortgagor, any
partner(s) or Mortgagor, any member(s). of Mortgagor, or any agent of
Mortgagor. These provisions shall survive any termination, satisfaction or
foreclosure of this Mortgage and shall not be subject to the limitations on
personal liability described in Section 7.30 of this Mortgage.
B. Asbestos. Neither Mortgagor nor Guarantor shall install or permit to
--------
be installed on the Property friable asbestos or any substance containing
asbestos and deemed hazardous by federal, state or local laws, rules,
regulations or orders respecting such material. With respect to any such
material currently present on the Property, Mortgagor and/or Guarantor
shall promptly comply with such federal, state or local laws, rules,
regulations or orders at Mortgagor's and/or Guarantor's expense. If
Mortgagor or Guarantor shall fail to comply, Mortgagee may declare this
Mortgage to be in default. In addition, Mortgagor hereby grants Mortgagee
and its employees and agents an irrevocable and non-exclusive license
subject to the rights of tenants, at all reasonable times and upon
reasonable notice, to enter the Property to inspect, and
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<PAGE>
(upon the expiration of the applicable cure period under this Mortgage)
conduct testing and remove friable asbestos or substances containing
asbestos and deemed hazardous by federal, state or local laws, rules,
regulations or orders respecting such material. The costs of such
inspection, testing and removal shall immediately become due to Mortgagee
and shall be secured by this Mortgage. Mortgagor and Guarantor, jointly
and severally, shall indemnify Mortgagee and hold Mortgagee harmless from
and against all loss, liability, damage, claim, judgment, cost and expense
(including, without limitation, attorneys' fees and costs incurred in the
investigation, defense and settlement of claims) that Mortgagee may incur
as a result of or in connection with
(i) the assertion against Mortgagee of any claim relating to the presence
or removal of any asbestos substance referred to in this PARAGRAPH 2.17.B.,
------------------
or (ii) compliance with any federal, state or local laws, rules,
regulations or orders relating thereto.
C. The indemnities in SUBPARAGRAPHS A. and B. above shall survive any
-----------------
termination, satisfaction or foreclosure of this Mortgage and shall not be
subject to the limitation on personal liability described in the Note or in
PARAGRAPH 7.30 hereof.
---------------
2.18 ERISA. Mortgagor and Guarantor hereby represent and warrant that Mortgagor
-----
is not an "employee benefit plan" (within the meaning of section 3(3) of
ERISA) to which ERISA applies, and Mortgagor's assets do not constitute
assets of any such plan.
2.19 LEASES.
------
A. Mortgagor shall have the right to do the following with respect to
existing Leases and new Leases affecting the Property: (a) Mortgagor may
terminate any Lease (other than the Lease of a Major Tenant or a tenant
leasing more than 24,000 square feet) which is in default; (b) Mortgagor
may amend any Lease (other than the Lease of a Major Tenant or a tenant
leasing more than 24,000 square feet) provided the amendment does not (i)
increase the obligations of the landlord, (ii) decrease or accelerate the
rent, or (iii) decrease the term; and (c) Mortgagor may enter into new
Leases (or renew existing Leases) for premises of 24,000 square feet or
less provided each Lease satisfies the minimum leasing requirements in
Subparagraph B. of this PARAGRAPH 2.19 and is on Mortgagor's standard form
---------------- ---------------
lease (approved by Mortgagee) with no modifications that increase the
obligations of the landlord. Except as expressly provided in this
PARAGRAPH 2.19 (or after obtaining Mortgagee's prior written consent),
---------------
Mortgagor shall not (i) amend or modify any Lease, (ii) extend or renew
(except in accordance with the existing Lease provisions, if any) any
Lease (iii) terminate or accept the surrender of any Lease except in
accordance with the terms of any Lease approved or deemed approved by
Mortgagee, (iv) enter into any new Lease of the Property, or (v) accept any
prepayment of rent more than thirty (30) days in advance, termination fee,
or any similar payment.
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<PAGE>
B. Minimum Leasing Requirements: All new Leases covering the Property entered
-----------------------------
into prior to obtaining Mortgagee's prior written consent shall be third-party,
arm's-length leases, and shall satisfy the following conditions:
(i) Term: The minimum term of new Leases (original or renewal) shall be
not less than 24 months (excluding Tenants under 2000 square feet).
(ii) Rental Basis: Each new Lease must be on a net rental basis with
monthly payments, with all utilities appropriately charged to tenants, and
with tenants to pay for all nonstructural repairs to the leased premises
and the tenant's pro rata share of all taxes, insurance, and common area
operating and maintenance costs.
(iii) Minimum Rentals (without offsets, deductions, or concessions): The
minimum rental for all space in the Premises shall be not less than $8.00
per square foot per year, and for gross rental, not less than $8.00 per
square foot per year in excess of the base year amount or dollar stop.
C. Mortgagee agrees to provide subordination non-disturbance and attornment
agreements if requested by Mortgagor if: (i) the lease meets all of the terms in
the leasing guidelines or was otherwise approved by Mortgagee, (ii) the request
is accompanied by payment to Mortgagee of Mortgagee's customary service fee as
established by Mortgagee from time to time, but no fee shall be required for the
first request each calendar year and, (iii) the subordination non-disturbance
and attornment agreement is in form and substance satisfactory to Mortgagee.
ARTICLE 3 CASUALTIES AND CONDEMNATION
3.1 CASUALTIES AND INSURANCE PROCEED
--------------------------------
A. In the event of any damage to or loss or destruction of the Property,
Mortgagor will promptly notify Mortgagee of such event and take such steps as
shall be necessary to preserve any undamaged portion of the Property. If,
pursuant to PARAGRAPH 3.1.B, hereof, the insurance proceeds are applied to the
---------------
restoration, replacement or rebuilding of the Property (but regardless of
whether such insurance proceeds, if any, shall be sufficient for the purpose),
Mortgagor will promptly commence and diligently pursue to completion the
restoration, replacement and rebuilding of the Property as nearly as possible to
its value, condition and character immediately prior to such damage, loss or
destruction, all in accordance with plans and specifications approved by
Mortgagee and with the remaining provisions of this PARAGRAPH 3.1.
-------------
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<PAGE>
B. In the event that all or any portion of the Property is damaged, destroyed
or lost, and such damage, destruction or loss is covered, in whole or in part,
by insurance required under this Mortgage or otherwise maintained by Mortgagor,
then (i) Mortgagor shall notify its insurance company of any damage within five
(5) days after any such damage and make proof of loss within thirty (30)
business days after such damage, destruction, or loss and is hereby entitled to
settle, adjust or compromise any claims for damage, destruction or loss
thereunder (except that, if an Event of Default exists, Mortgagee may, but shall
not be obligated to, make such proof of loss and settle any claims in connection
therewith), and (ii) all proceeds payable to Mortgagor thereunder will be
delivered to Mortgagee and, accordingly, each insurance company concerned is
hereby authorized and directed to make payment therefor directly to Mortgagee,
provided, however, if rental loss insurance is always paid on a monthly basis,
sufficient funds from the rental loss insurance shall be paid to Mortgagor to
pay operating expenses of the Property and debt service to Mortgagee.
Notwithstanding anything contained herein seemingly to the contrary, if the
aggregate amount of all claims for damage, destruction or loss is less than Five
Hundred Thousand and 00/100 Dollars ($500,000.00) and for so long as no Event of
Default has occurred, Mortgagor may independently settle, adjust or compromise
such claims with Mortgagee involved as specified above, provided that Mortgagee
is promptly notified of any such settlement, adjustment or compromise. In all
other cases, Mortgagee shall have the right to apply the insurance proceeds,
first, to reimburse Mortgagee for all costs and expenses, including adjustors'
and attorneys' fees and disbursements, incurred in connection with the
collection of such proceeds, and, second, at Mortgagee's option, to pay all or
any part of the Indebtedness, whether or not then due and payable, in the order
and manner determined by Mortgagee, or to the cure of any then current default
hereunder, or to the restoration, replacement or rebuilding, in whole or in
part, of the portion of the Property damaged, destroyed or lost, provided that
any insurance proceeds held by Mortgagee to be applied to the restoration,
replacement or rebuilding of the Property shall be so held and shall be paid out
from time to time upon compliance by Mortgagor with such provisions and
requirements as may be imposed by Mortgagee. To the extent that any
Indebtedness shall remain outstanding after such application of proceeds, the
unpaid Indebtedness will continue in full force and effect and Mortgagor will
not be excused in the payment thereof. If such proceeds are insufficient to
effect the complete restoration, replacement or rebuilding of the Property,
Mortgagee may at its option declare the balance of the Indebtedness to be due
and payable forthwith and avail itself of any of the remedies provided herein or
in any of the other Loan Documents. If Mortgagor shall have received all or any
portion of such insurance proceeds or any other proceeds relating to such damage
or destruction, Mortgagor, upon demand from Mortgagee, will pay to Mortgagee an
amount equal to the amount so received by Mortgagor, to be applied by Mortgagee
in accordance with this PARAGRAPH 3.1.B. Notwithstanding anything herein or at
---------------
law or in equity to the contrary, none of the insurance proceeds or payments in
lieu thereof paid to Mortgagee as herein provided shall be deemed trust funds
and Mortgagee shall be
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<PAGE>
entitled to dispose of such proceeds as provided herein. Mortgagor expressly
assumes all risk of loss, including a decrease in the use, enjoyment or value of
the Property, from any casualty whatsoever, whether or not insurable or insured
against.
C. Anything in this PARAGRAPH 3.1 to the contrary notwithstanding, in the
-------------
event of an insured loss, Mortgagee will permit the application of insurance
proceeds to restoration of the Property to as good or better condition as
existed prior to the damage, destruction or loss, in accordance with plans and
specifications approved by Mortgagee in its reasonable discretion, if: (i) the
amount of the loss does not exceed Twenty Million and 00/100 Dollars
($20,000,000.00) or as otherwise approved by Mortgagee; (ii) no Event of
Default, or event which with the passage of time or the giving of notice or both
would constitute an Event of Default, has occurred or is continuing beyond any
applicable cure periods at the time of such application; (iii) no insurer denies
liability to any named insured; (iv) leases which are terminated or terminable
as a result of such damage, destruction or loss do not include any Leases to
Major Tenants and cover an aggregate rentable square footage of less than fifty
thousand (50,000) square feet in the Improvements, provided however, that if
Mortgagor obtains waivers from any tenants whose leases are terminable as a
result of such damage, those leases shall not be included when calculating the
maximum aggregate square footage allowed as above stated, and; (v) rental loss
insurance is available and in force and effect to offset fully any abatement of
rent to which any tenants of the Premises may be entitled as a result of such
damage, destruction or loss; (vi) in Mortgagee's sole judgment, restoration can
be completed within one year after the damage, destruction or loss and at least
two ears before the maturity of the Note; (vii) Mortgagor shall have entered
into a general construction contract acceptable in all respects to Mortgagee for
restoration, which contract must, among other things, include a provision for
retainage of not less than ten percent (10%) until complete restoration is
achieved, and a final completion date which is at least two years before the
maturity of the Loan; and (viii) in Mortgagee's reasonable judgement, the
security for the Loan must not have been in any other manner materially impaired
as a result of such damage, destruction or loss. In the event that Mortgagee
does not permit the application of the proceeds or other payment to the
restoration of the Property, Mortgagor shall have the right to repay the Loan
without Prepayment Premium.
D. If Mortgagee elects or is obligated pursuant to PARAGRAPH 3.1.B. or
----------------
PARAGRAPH 3.1.C. hereof to apply insurance proceeds to the restoration of the
- -----------------
Property, the proceeds shall be disbursed pursuant to a disbursement procedure
established by Mortgagee, which may include, at Mortgagee's election, use of a
disbursing agent ("Depository") selected by Mortgagee. The costs and expenses
of the disbursement procedure, including the fees and expenses of the
Depository, shall be paid by Mortgagor. Mortgagor will immediately, upon demand
by Mortgagee, from time to time deposit with Mortgagee or Depository, in a
mutually acceptable interest-bearing account, such amounts in excess of the
amount from time to time on deposit as may
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<PAGE>
be necessary to complete such restoration in Mortgagee's sole judgment and such
amounts shall be the first to be disbursed by Mortgagee hereunder. Under no
circumstance will the Mortgagee be obligated to make any portion of the proceeds
available for restoration unless at the time of the request for any disbursement
it has determined in its reasonable discretion that the restoration can be
completed at a cost (which cost shall include all payments coming due under the
terms of the Loan) which does not exceed the aggregate of the remaining proceeds
and any funds deposited with Mortgagee by Mortgagor. If Mortgagor shall fail to
timely complete the restoration of the Property as determined by Mortgagee in
its sole discretion, or if an Event of Default occurs prior to full disbursement
of the insurance proceeds, any undisbursed portion may, at Mortgagee's option,
be applied to the Indebtedness, whether or not then due and in any order of
priority, and such application shall be deemed a prepayment of the Indebtedness.
E. The proceeds, including any loss of rental income insurance proceeds which
have been deposited with Mortgagee or which the carrier has acknowledged to be
payable, and any additional funds deposited by Mortgagor with Mortgagee, shall
constitute additional security for the Loan. Mortgagor will execute, deliver,
file and/or record, at its own expense, such documents and instruments as
Mortgagee may require to grant to Mortgagee a perfected, first priority security
interest in such proceeds and additional funds.
3.2 CONDEMNATION.
------------
A. Promptly upon obtaining knowledge of any pending or threatened
institution of any proceedings for the condemnation of the Property, or any
part or interest therein, or of any right of eminent domain, or of any
other proceedings arising out of injury or damage to or decrease in the
value of the Property (including any change in any street, whether as to
grade, access or otherwise), or any part thereof or interest therein,
Mortgagor will notify Mortgagee of the threat or pendency thereof.
Mortgagee may participate in any such proceedings (but shall not be
obligated to do so), the cost of which, including the reasonable fees and
expenses of attorneys and agents selected by Mortgagee, shall be borne by
Mortgagor. Mortgagor from time to time will execute and deliver to
Mortgagee all instruments requested by Mortgagee or as may be required to
permit such participation. Mortgagor will, at its expense, diligently
prosecute any such proceeding, will deliver to Mortgagee copies of all
papers served in connection therewith and will consult and cooperate with
Mortgagee, its attorneys and agents, in the carrying on and defense of any
such proceeding; provided that no settlement of any such proceeding will be
made by Mortgagor without Mortgagee's prior written consent.
B. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation, and all judgments, decrees and awards for injury or damage to
the Property are hereby assigned and shall be paid to Mortgagee. Mortgagor
will execute and deliver
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<PAGE>
such further assignments thereof as Mortgagee may request and authorizes
Mortgagee to collect and receive the same, to give receipts and
acquittances therefor and to appeal from any such judgment, decree or
award. Mortgagee shall in no event be liable or responsible for failure to
collect, or to exercise diligence in the collection of, any of the same, or
be obligated to question the amount of the same.
C. Mortgagee will apply any proceeds, judgments, decrees or awards
referred to in PARAGRAPH 3.2.B. hereof, first to reimburse Mortgagee for
---------------
all costs and expenses, including reasonable attorneys' fees and
disbursements, incurred in connection with the proceeding in question and
any appeal therefrom or in the collection of such amounts, and, second, to
apply the remainder thereof as provided in PARAGRAPH 3.1.B. hereof for
---------------
insurance proceeds held by Mortgagee. If, pursuant to those provisions,
Mortgagee applies such proceeds, judgments, decrees or awards to the
restoration, replacement or rebuilding of the affected Property, Mortgagor
will restore, replace or rebuild the Property in accordance therewith. If
Mortgagor receives all or any portion of such proceeds, judgments, decrees
or awards, Mortgagor, upon demand from Mortgagee, will pay to Mortgagee an
amount equal to the amount so received by Mortgagor, to be applied by
Mortgagee pursuant to this PARAGRAPH 3.2. Notwithstanding anything herein
-------------
or at law or in equity to the contrary, none of the proceeds, judgments,
decrees or awards or payments in lieu thereof paid to Mortgagee as herein
provided will be deemed trust funds and Mortgagee will be entitled to
dispose of such proceeds as provided in this PARAGRAPH 3.2.
--------- ---
D. Anything in this PARAGRAPH 3.2 to the contrary notwithstanding, in the
--------------
event of a partial taking, Mortgagee will permit the application of any
condemnation award or other payment to the restoration of the Property
(including, but not limited to, parking, drives, recreational areas,
sidewalks and landscaping) to as good or better condition as theretofore
existed, in accordance with plans and specifications approved by Mortgagee
in its reasonable discretion, if: (i) such taking involves less than five
percent (5%) of the rentable square feet in the Improvements and less than
five percent (5%) of the parking spaces, and does not affect access to the
Property (or any part thereof) from any public right-of-way or as otherwise
approved by Mortgagee; (ii) no Event of Default, or event which with the
passage of time or the giving of notice or both would constitute an Event
of Default, has occurred or is continuing at the time of such application;
(iii) Leases which are terminated or terminable as a result of such damage,
destruction or loss do not include any Leases to Major Tenants and cover an
aggregate rentable square footage of less than five percent (5%) of the
total rentable square footage in the Improvements immediately before such
damage, destruction or loss; (iv) the remaining Property continues at all
times to comply with all applicable Laws and Restrictions; and (v) in
Mortgagee's sole judgment, (a) restoration is practicable and can be'
completed within one year after the taking and at least two years prior to
the maturity of the Note, and (b) the Property will be economically viable
after restoration. In the event that Mortgagee does not permit the
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<PAGE>
application of the condemnation award or other payment to the restoration
of the Property, Mortgagor shall have the right to repay the Loan without
Prepayment Premium.
E. Notwithstanding any condemnation, taking or other proceeding referred
to in this PARAGRAPH 3.2 causing injury to or decrease in value of the
-------------
Premises or any interest therein, Mortgagor will continue to timely pay and
perform the Obligations. The reduction in the Obligations resulting from
an application of any proceeds, judgments, decrees or awards, shall be
deemed to take effect only on the date Mortgagee actually receives and
applies such proceeds, judgments, decrees, or awards against the
Obligations. Mortgagee's rights to any such proceeds, judgments, decrees
or awards will not be diminished if, before Mortgagee's receipt of the
same, the Property shall have been sold through foreclosure of this
Mortgage (or pursuant to the power of sale granted hereunder), or shall
have been transferred by deed in lieu of foreclosure.
ARTICLE 4 EVENTS OF DEFAULT
4.1 EVENTS OF DEFAULT.
-----------------
A. It shall constitute an "Event of Default" hereunder if any of the
following events shall occur:
(i) Mortgagor shall fail to perform on the required date any
Obligation (a) involving the payment of money other than monthly
installments of principal and interest within ten (10) days after
notice by Mortgagee, or (b) involving the payment of principal and/or
interest under the Note within four (4) days after notice by Mortgagee
(the "Monthly Payment Grace Period"), provided however, in the event
that Mortgagor shall fail to pay any installment of principal and/or
interest due on the Note on the Monthly Due Date (as such term is
defined in the Note) more than (i) two (2) times in any twelve month
period, or (ii) four (4) times in the aggregate during the term hereof,
the Monthly Payment Grace Period shall terminate, and thereafter, upon
the failure to pay any installment of principal and/or interest on the
Monthly Due Date, Mortgagee shall have the option of declaring all of
the Indebtedness to be immediately due and payable;
(ii) Mortgagor shall fail to timely observe, perform or discharge any
non-monetary Obligation, other than a non-monetary Obligation described
in any other clause in this Article 4, and any such failure shall
---------
remain unremedied for thirty (30) days or such lesser period as may be
otherwise specified in the applicable Loan Document (the "Grace
Period") after
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<PAGE>
written notice to Mortgagor of the occurrence of such failure; provided,
however, that Mortgagee shall extend the Grace Period up to one hundred
eighty (180) days if (a) Mortgagee determines in good faith that (A) such
default cannot be cured within the Grace Period but can be cured within one
hundred eighty (180) days, (B) no lien or security interest created by the
Loan Documents shall be impaired prior to the completion of such cure, and
(C) Mortgagee's immediate exercise of any remedies provided hereunder or by
law is not necessary for the protection or preservation of the Property or
Mortgagee's security interest therein, and (b) Mortgagor shall immediately
commence and diligently pursue the cure of such default;
(iii) Mortgagor, as lessor or sublessor, as the case may be, shall assign
the Rents without first obtaining the written consent of Mortgagee;
(iv) default by Mortgagor after the expiration of all applicable grace or
cure periods under any agreement to which Mortgagor is a party, other than
the Loan Documents, which agreement relates to the borrowing of money by
Mortgagor from any Person, and such default might give rise to a Material
Adverse Change or adversely affect the security for the Loan, including a
default by Mortgagor under the loan documents evidencing or relating to a
junior lien on the Property;
(v) any representation or warranty made by Mortgagor in, under or
pursuant to any of the Loan Documents was false in any material respect as
of the date on which such representation or warranty was made or deemed
remade;
(vi) any of the Loan Documents shall cease to be in full force and effect
or be declared null and void, or shall cease to constitute valid and
subsisting liens and/or valid and perfected security interests in and to
the Property, or Mortgagor shall contest or deny in writing that it has any
further liability or obligation under any of the Loan Documents;
(vii) the occurrence of a Transfer without the Mortgagee's prior written
consent (as required under the provisions of PARAGRAPH 2.13 hereof); or the
---------------
occurrence of any other event which, under the terms of the Loan Documents,
would permit Mortgagee to accelerate the Obligations after the expiration
of the applicable cure periods, if any;
(viii) Mortgagor shall fail at any time to satisfy the requirements of
PARAGRAPH 2.15 hereof and such failure shall continue for five (5) days
--------------
after written notice thereof;
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<PAGE>
(ix) any Principal Party shall generally not pay its debts as they become
due or shall admit in writing its inability to pay its debts, or shall have
made a general assignment for the benefit of creditors;
(x) any Principal Party shall commence any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking to have an
order for relief entered against it as debtor, or seeking appointment of a
Receiver for it or for all or any substantial part of its property
(collectively, a "Proceeding");
(xi) any Principal Party shall take any action to authorize any of the
actions set forth above in clauses (ix) or (x) above; or
(xii) any Proceeding shall be commenced against any Principal Party and
such Proceeding (1) materially affects the ability of Mortgagor or
Guarantor to satisfy the Obligations, (2) results in the entry of an order
for relief against it which is not fully stayed within seven (7) business
days after the entry thereof; (3) remains undismissed for a period of
forty-five (45) days, and (4) Debt Service Coverage is 1.0 or less at the
time either (2) or (3), above, become applicable.
ARTICLE 5 REMEDIES
5.1 ACCELERATION. Upon the occurrence, and during the continuance of any
--------------
Event of Default, Mortgagee may at any time declare all of the Indebtedness
to be due and payable and the same shall thereupon become immediately due
and payable, together with all payments due in accordance with the terms of
the Note, without any further presentment, demand, protest or notice of any
kind.
5.2 FORECLOSURE: EXPENSE OF LITIGATION; INDEMNIFICATION. If an Event of
---------------------------------------------------
Default has occurred and is continuing hereunder, or when the indebtedness
hereby secured, or any part thereof, shall become due, whether by
acceleration or otherwise, Mortgagee shall have the right to foreclose the
lien hereof with respect to all or any part of the Property, and for such
indebtedness or part thereof and pursue all remedies afforded to a
mortgagee under all applicable laws. In case of any foreclosure sale of
less than all of the Property, Mortgagee shall have the right to foreclose
the lien hereof with respect to all or any part of the remaining Property,
for any remaining unpaid portion of the indebtedness secured hereby. In
case of any foreclosure sale of the Property, the same may be sold in one
or more parcels.
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It is further agreed that if Mortgagor defaults in the payment of any
part of the Indebtedness, as an alternative to the right of foreclosure for
the full Indebtedness after acceleration thereof, Mortgagee shall have the
right to institute partial foreclosure proceedings with respect to the
portion of the Indebtedness so in default, as if under a full foreclosure,
and without declaring the entire Indebtedness due (such proceeding being
hereinafter referred to as a "partial foreclosure"), and provided that if
foreclosure judgment is entered pursuant to a partial foreclosure
proceeding because of default of a part of the Indebtedness, such judgment
and sale pursuant thereto may be made subject to the continuing lien of
this Mortgage for the unmatured part of the Indebtedness; and it is agreed
that such judgment or sale pursuant to a partial foreclosure, if so made,
shall not in any manner affect the unmatured part of the Indebtedness, but
as to such unmatured part this Mortgage and the lien hereof shall remain in
full force and effect just as though no foreclosure judgment or sale had
been entered or made under the provisions of this PARAGRAPH 5.2.
-------------
Notwithstanding the filing of any partial foreclosure or entry of a
judgment of foreclosure therein, Mortgagee may elect at any time prior to a
foreclosure sale pursuant to such judgment, to discontinue such partial
foreclosure and to accelerate the Indebtedness by reason of any uncured
default or defaults upon which such partial foreclosure was predicated or
by reason of any other defaults, and proceed with full foreclosure
proceedings. It is further agreed that several foreclosure sales may be
made pursuant to partial foreclosure without exhausting the right of full
or partial foreclosure sale for any unmatured part of the Indebtedness, it
being the purpose to provide for a partial foreclosure sale of the
Indebtedness for any matured portion of the Indebtedness without exhausting
the power to foreclose and to sell the Property, pursuant to any such
partial foreclosure for any other part of the Indebtedness whether matured
at the time or subsequently maturing, and without exhausting any right of
acceleration and full foreclosure.
Without limiting the liability of Mortgagor as set forth above,
Mortgagor shall indemnify Mortgagee and its officers, directors, employees
and agents, and hold them harmless from and against all claims, injury,
damage, loss and liability of any and every kind to any persons or property
(unless caused by the gross negligence or wilful misconduct of Mortgagee)
by reason of (i) any construction work undertaken at the Property by any
person or entity; (ii) the operation or maintenance of the Property; or
(iii) any other action or inaction by, or matter which is the
responsibility of Mortgagor.
5.3 APPLICATION OF PROCEEDS OF FORECLOSURE SALE. The proceeds of any
-------------------------------------------
foreclosure sale of the Property shall be distributed and applied in
accordance with the provisions of applicable law. The judgment of
foreclosure or order confirming the sale shall provide for application of
sale proceeds in the following order of priority: first, all items which
under the terms hereof constitute secured indebtedness additional to that
evidenced by the Note, with interest thereon as herein provided; and
second, all amounts remaining unpaid on the Note.
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5.4 APPOINTMENT OF RECEIVER. Upon, or at any time after the filing of a
--------------------------
complaint to foreclose this Mortgage, the court in which such complaint is
filed shall appoint a receiver of the Property whenever Mortgagee, when
entitled to possession, so requests pursuant to applicable law or when such
appointment is otherwise authorized by operation of law. Such receiver
shall have all powers and duties prescribed by applicable law, including
the power to make leases to be binding upon all parties, including the
Mortgagor, after redemption (if applicable), the purchaser at a sale
pursuant to a judgment of foreclosure and any Person acquiring an interest
in the Property after entry of a judgment of foreclosure, all as provided
by applicable law. In addition, such receiver shall also have the
following powers: (a) to extend or modify any then existing leases, which
extensions and modifications may provide for terms to expire, or for
options to lessees to extend or renew terms to expire, beyond the maturity
date of the indebtedness hereunder and beyond the date of the issuance of a
deed or deeds to a purchaser or purchasers at a foreclosure sale, it being
understood and agreed that any such leases, and the options or other such
provisions to be contained therein, shall be binding upon Mortgagor and all
persons whose interests in the Property are subject to the lien hereof and
upon the purchaser or purchasers at any foreclosure sale, notwithstanding
any redemption, discharge of the Indebtedness, satisfaction of any
foreclosure decree or judgment, or issuance of any certificate of sale or
deed to any purchaser; and (b) all other powers which may be necessary or
are usual in such cases for the protection, possession, control, management
and operation of the Property during the whole of the period of
receivership. The court from time to time, either before or after entry of
judgment of foreclosure, may authorize the receiver to apply the net income
in his hands in payment in whole or in part of: (a) the Indebtedness
secured hereby, or by or included in any judgment of foreclosure or
supplemental judgment or other item for which Mortgagee is authorized to
make a Protective Advance; and (b) the deficiency in case of a sale and
deficiency.
5.5 MORTGAGEE'S RIGHT OF POSSESSION IN CASE OF DEFAULT. In any case in which
--------------------------------------------------
under the provisions of this Mortgage Mortgagee has a right to institute
foreclosure proceedings, whether before or after the entire indebtedness
secured hereby is declared to be immediately due as aforesaid, or whether
before or after the institution of legal proceedings to foreclose the lien
hereof or before or after judgment thereunder, and at all times until
confirmation of sale, Mortgagor shall forthwith, upon demand of Mortgagee,
surrender the Property to Mortgagee and Mortgagee shall be entitled to take
possession of the Property, and upon Mortgagee's request to the court to be
placed in actual possession of the Property, Mortgagee shall be placed in
possession of the Property or any part thereof, personally, or by its agent
or attorneys as provided by applicable law. In such event Mortgagee in its
discretion may, with or without force and with or without process of law,
enter upon and take and maintain possession or may apply to the court in
which a foreclosure is pending to be placed in possession, of all or any
part of said Property, together with all documents, books, records, papers
and accounts of Mortgagor or then owner of the Property relating thereto,
and may exclude Mortgagor, its agents or servants, wholly therefrom and
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<PAGE>
may, as attorney in fact or agent of Mortgagor, or in its own name as
Mortgagee and under the powers herein granted, hold, operate, manage and
control the Property and conduct the business, if any, thereof, either
personally or by its agents, and with full power to use such measures,
legal or equitable, as in its discretion or in the discretion of its
successors or assigns may be deemed proper or necessary to enforce the
payment or security of the avails, rents, issues, and profits of the
Property, including actions for the recovery of rent, actions in forcible
detainer and actions in distress for rent, and with full power: (a) to
cancel or terminate any lease or sublease for any cause or on any ground
which would entitle Mortgagor to cancel the same; (b) to elect to disaffirm
any lease or sublease which is then subordinate to the lien hereof; (c) to
extend or modify any then existing leases and to make new leases, which
extensions, modifications and- new leases may provide for terms to expire,
or for options to lessees to extend or renew terms to expire, beyond the
maturity date of the Indebtedness and beyond the date of the issuance of a
deed or deeds to a purchaser or purchasers at a foreclosure sale, it being
understood and agreed that any such leases, and the options or other such
provisions to be contained therein, shall be binding upon Mortgagor and all
persons whose interests in the Property are subject to the lien hereof and
upon the purchaser or purchasers at any foreclosure sale, notwithstanding
any redemption from sale, discharge of the Indebtedness, satisfaction of
any foreclosure decree or judgment, or issuance of any certificate of sale
or deed to any purchaser; (d) to enter into any management, leasing,
brokerage, service, supply or other agreements relating to the Property;
(e) to make all necessary or proper repairs, decorating, renewals,
replacements, alterations, additions, betterments and improvements to the
Property as to it may seem judicious; (f) to insure and reinsure the same
and all risks incidental to Mortgagee's possession, operation and
management thereof; and (g) to receive all of such avails, rents, issues
and profits; hereby granting full power and authority to exercise each and
every of the rights, privileges and powers herein granted at any and all
times hereafter, without notice to Mortgagor. Without limiting the
generality of the foregoing provisions of this PARAGRAPH 5.5, Mortgagee
-------------
shall also have all other power, authority and duties as provided by
applicable law.
Mortgagee shall not be obligated to perform or discharge, nor does it
hereby undertake to perform or discharge, any obligation, duty or liability
under any Leases. Mortgagor shall and does hereby agree to indemnify and
hold Mortgagee harmless of and from any and all liability, loss or damage
which it may or might incur by reason of its performance or non-performance
of any action authorized under this PARAGRAPH 5.5, and of and from any and
-------------
all claims and demands whatsoever which may be asserted against it by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the duties, terms, covenants or agreements of Mortgagor.
Should Mortgagee incur any such liability, loss or damage, by its
performance or nonperformance of actions authorized by this PARAGRAPH 5.5,
--------------
or in the defense of any such claims or demands, the amount thereof,
including costs, expenses and reasonable attorneys' fees, together with
interest on any such amount at
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<PAGE>
the Default Rate (as such term is defined in the Note) shall be secured
hereby, and Mortgagor shall reimburse Mortgagee therefor immediately upon
demand.
5.6 MORTGAGEE'S PERFORMANCE OF DEFAULTED ACTS; PROTECTIVE ADVANCES;
---------------------------------------------------------------
SUBROGATION. In case Mortgagor fails to perform any of its covenants and
-----------
agreements herein or in any of the Loan Documents, Mortgagee may, but need
not, make any payment or perform any act herein or therein required of
Mortgagor, in any form and manner deemed expedient, and may, but need not,
make full or partial payments of principal or interest on any Prior
Encumbrances (as hereinafter defined), if any, and purchase, discharge,
compromise or settle any tax lien or other prior lien or title or claim
thereof, or redeem from any tax sale or forfeiture affecting the Property
or contest any tax or assessment.
In the event Mortgagee shall elect, pursuant to this PARAGRAPH 5.6, to
-------------
undertake to perform Mortgagor's obligations for restoration or rebuilding
as required of Mortgagor by PARAGRAPH 3.1 or PARAGRAPH 3.2 hereof,
------------- -------------
Mortgagee shall not be required to restore or rebuild the improvements to
any greater extent than will be covered by available proceeds or estimated
proceeds of insurance or condemnation award. An estimate of available
proceeds may be made if at such time as Mortgagee is prepared to arrange
for plans, solicit bids, let a contract, or otherwise proceed with
restoration, the loss shall not have been adjusted with insurers or the
court shall not have finally determined the amount of a condemnation award.
If Mortgagee shall have expended any amount for restoration or rebuilding
in excess of the actual or estimated proceeds of insurance or condemnation
award for the purpose of such repair or replacement, the amount of such
excess ("Excess Restoration Cost") so expended by Mortgagee shall
constitute additional indebtedness hereunder and shall be secured by the
lien hereof.
All advances, disbursements and expenditures (collectively "advances")
made by Mortgagee before and during foreclosure, prior to sale, and where
applicable, after sale, for the following purposes, including interest
thereon at the Default Rate, are hereinafter referred to as "Protective
Advances":
(a) advances pursuant to this PARAGRAPH 5.6;
--------------
(b) Excess Restoration Costs;
(c) advances in accordance with the terms of this Mortgage to:
(i) protect, preserve or restore the Property; (ii) preserve the lien
of this Mortgage or the priority thereof; or (iii) enforce this
Mortgage, as referred to in Subsection (b)(5) of Section 15-302 of the
Illinois Mortgage Foreclosure Act (the "Act");
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(d) payments of (i) when due installments of principal, interest or
other obligations in accordance with the terms of any Prior
Encumbrance; (ii) when due installments of real estate taxes and other
Impositions; (iii) other obligations authorized by this Mortgage; or
(iv) with court approval any other amounts in connection with other
liens, encumbrances or interests reasonably necessary to preserve the
status of title, all as referred to in the first paragraph of this
PARAGRAPH 5.5 hereof and under Section 15-1505 of the Act;
-------------
(e) attorneys' fees and other costs incurred in connection with the
foreclosure of this Mortgage as referred to in Sections 1504(d)(2) and
15-1510 of the Act, and attorneys' fees and other costs incurred in
connection with any other litigation or administrative proceeding to
which the Mortgagee may be or become or be threatened or contemplated
to be a party, including probate and bankruptcy proceedings, or in the
preparation for the commencement or defense of any such suit or
proceeding, including filing fees, appraisers' fees, outlays for
documents and expert evidence, witness fees, stenographer's charges,
publication costs, and costs (which may be estimated as to items to be
expended after entry of judgment) of procuring all such abstracts of
title, title charges and examinations, foreclosure minutes, title
insurance policies, Torrens certificates, appraisals, and similar data
and assurances with respect to title and value as Mortgagee may deem
reasonably necessary either to prosecute or defend such suit or, in
case of foreclosure, to evidence to bidders at any sale which may be
had pursuant to the foreclosure judgment the true condition of the
title to or the value of the Property;
(f) Mortgagee's fees and costs arising between the entry of judgment
of foreclosure and the confirmation hearing as referred to in
Subsection(b)(1); of Section 15-1508 of the Act;
(g) payment by Mortgagee of Impositions as required of Mortgagor by
PARAGRAPH 2.4 hereof;
-------------
(h) Mortgagee's advances of any amount required to make up a
deficiency in deposits for installments of Impositions, as required of
Mortgagor by PARAGRAPH 2.4 hereof;
-------------
(i) expenses deductible from proceeds of sale referred to in
Subsections (a) and (b) of Section 15-1512 of the Act; and
(j) expenses incurred and expenditures made by Mortgagee for any one
or more of the following:
(i) if the Property or any portion thereof constitutes one or more
units under a condominium declaration, assessments
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<PAGE>
imposed upon the owner thereof; (ii) if any of the Property consists
of an interest in a leasehold estate under a lease or sublease,
rentals or other payments required to be made by the lessee under the
terms of the lease or sublease; (iii) premiums upon casualty and
liability insurance made by Mortgagee whether or not Mortgagee or a
receiver is in possession, if reasonably required, without regard to
the limitation to maintaining of insurance in effect at the time any
receiver or mortgagee takes possession of the Property imposed by
Subsection (c)(1) of Section 15-1704 of the Act (iv) payments required
or deemed by Mortgagee to be for the benefit of the Property or
required to be made by the owner of the Property under any grant or
declaration of easement, easement agreement, reciprocal easement
agreement, agreement with any adjoining land owners or other
instruments creating covenants or restrictions for the benefit of or
affecting the Property; (v) shared or common expense assessments
payable to any association or corporation in which the owner of the
premises is a member in any way affecting the Property; (vi) operating
deficits incurred by Mortgagee in possession or reimbursed by
Mortgagee to any receiver; and (vii) fees and costs incurred to obtain
an environmental assessment report relating to the Property.
This Mortgage shall be a lien for all Protective Advances as provided in
Subsection (b) 5 of Section 15-1302 of the Act as to subsequent purchasers and
judgment creditors from the time the Mortgage is recorded.
The Protective Advances shall, except to the extent, if any, that any of
the same is clearly contrary to or inconsistent with the Act, be included in:
(a) determination of the amount of indebtedness secured by this
Mortgage at any time;
(b) the indebtedness found due and owing to the Mortgagee in the judgment
of foreclosure and any subsequent amendment of such judgment, supplemental
judgments, orders, adjudications or findings by the court of any additional
indebtedness becoming due after entry of such judgment, it being hereby
agreed that in any foreclosure judgment, the court may reserve jurisdiction
for such purpose;
(c) if right of redemption has not been waived by this Mortgage,
computation of the amount required to redeem, pursuant to Sections (d)(2)
and (e) of Section 15-1603 of the Act;
(d) determination of amounts deductible from sale proceeds pursuant to
Section 15-1512 of the Act;
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<PAGE>
(e) determination of the application of income in the hands of any
receiver or mortgagee in possession; and
(f) computation of any deficiency judgment pursuant to Subsections (b)(2)
and (e) of Section 15-1508 and Section 15-1511 of the Act.
All moneys paid for Protective Advances or any of the other purposes herein
authorized and all expenses paid or incurred in connection therewith, including
attorneys' fees and expenses, and any other moneys advanced by Mortgagee to
protect the Property and the lien hereof, shall be so much additional
indebtedness secured hereby, and shall become immediately due and payable
without notice and with interest thereon at the Default Rate. Inaction of
Mortgagee shall never be considered as a waiver of any right accruing to it on
account of any default on the part of Mortgagor.
Should the proceeds of the Loan or any part thereof, or any amount paid out
or advanced hereunder by Mortgagee, be used directly or indirectly to pay off,
discharge or satisfy, in whole or in part, any senior mortgage (as described in
Subsection (i) of Section 15-1505 of the Act) or any other lien or encumbrance
upon the Property or any part thereof on a parity with or prior or superior to
the lien hereof (any such senior mortgage, or other lien or encumbrance is
sometimes hereinafter referred to as a 'Prior Encumbrance"), then as additional
security hereunder, the Mortgagee shall be subrogated to any and all rights,
equal or superior titles, liens and equities, owned or claimed by any owner or
holder of such Prior Encumbrance said outstanding liens, charges and
indebtedness, however remote, regardless of whether such Prior Encumbrance is
acquired by assignment or has been released of record by the holder thereof upon
payment.
ARTICLE 6. SECURITY AGREEMENT AND FIXTURE FILING
6.1 SECURITY AGREEMENT. Mortgagor hereby assigns and grants to Mortgagee a
------------------
first priority security interest in and to the Personalty and Rents and any
other part of the Property which may not be deemed real property or may not
constitute a "fixture' (within the meaning of Section 9-313 of the Uniform
Commercial Code (the "Code") of the State in which the Property is located),
and all replacements, substitutions, and additions of, for and to the same,
and the proceeds thereof (collectively, the "Collateral") in order to secure
payment of the Indebtedness and performance by the Mortgagor of the other
Obligations. This Mortgage shall constitute a Security Agreement within the
meaning of the Code with respect to such Property, under which Mortgagor is
the debtor, and Mortgagee is the secured party.
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<PAGE>
6.2 FIXTURE FILING. This Mortgage, upon recording or registration in the real
--------------
estate records of the proper office, shall constitute a "fixture filing"
within the meaning of Sections 9-313 and 9-402 of the Code with respect to
any and all Fixtures included within the term "Property" and any Personalty
that may now be or hereafter become "fixtures" within the meaning of
Section 9-313 of the Code.
6.3 REMEDIES. If an Event of Default occurs under this Mortgage, Mortgagee, in
--------
addition to its other rights and remedies provided under this Mortgage,
shall have all the rights and remedies available to a secured party under
the Code as well as all other rights and remedies available at law or in
equity. Mortgagor, upon request by Mortgagee, will assemble the Collateral
and make it available to Mortgagee at a place Mortgagee designates to allow
Mortgagee to take possession or dispose of the Collateral. Mortgagor
agrees that five (5) days' prior written notice of the time and place of
the sale of the Collateral, sent to Mortgagor in the manner provided for
the mailing of notices herein, is reasonable notice to Mortgagor. The sale
of the Collateral may be conducted by an employee or agent of Mortgagee and
any Person, including both the Mortgagor and Mortgagee, shall be eligible
to purchase any part or all of the Collateral at the sale. The reasonable
expenses of retaking, holding, preparing for sale, selling and the like
incurred by Mortgagee shall include, but not be limited to, attorneys' fees
and legal expenses incurred by Mortgagee, and shall be borne by Mortgagor.
6.4 FURTHER ASSURANCES. Mortgagor will upon request by Mortgagee from time to
------------------
time, and in the event all or any portion of the Property is leased to a
Person affiliated with a Principal Party, Mortgagor will cause such Person
to, (i) execute, acknowledge and deliver to Mortgagee a separate security
agreement, financing statement or other similar security instruments, in
form satisfactory to Mortgagee, covering all property concerning which
there may be any doubt whether the title to same has been conveyed by or
security interest perfected by this Mortgage and covering all goods which
in the opinion of Mortgagee are essential to the maintenance or operation
of the Property, (ii) execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing statement, affidavit,
continuation statement or certificate or other document as Mortgagee may
request in order to perfect, preserve, maintain, continue and/or extend the
security interests under and the priority of this Mortgage and such
security instrument, and (iii) deliver to Mortgagee an inventory of the
Collateral in reasonable detail. Mortgagor will pay to Mortgagee on demand
all costs and expenses incurred by Mortgagee in connection with the
preparation, execution, recording, filing and re-filing of any of the
foregoing documents.
6.5 WAIVERS. Mortgagor waives any right to require Mortgagee to (i) proceed
-------
against any Person, (ii) proceed against or exhaust any Collateral or (iii)
pursue any other remedy in its power, and further waives any defense
arising by reason of any disability or other defense of Mortgagor or any
other Person, or by reason of the
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<PAGE>
cessation from any cause whatsoever of the liability of Mortgagor or any
other Person. Until the Indebtedness shall have been paid in full,
Mortgagor shall not have any right to subrogation, and Mortgagor waives any
right to enforce any remedy which Mortgagee now has or may hereafter have
against Mortgagor or against any other Person and waives any benefit of and
any right to participate in any Collateral or security whatsoever now or
hereafter held by Mortgagee.
ARTICLE 7 MISCELLANEOUS
7.1 NO WAIVER. No failure by Mortgagee to insist upon strict, full and
---------
complete (i) payment when due of any portion of the Indebtedness or (ii)
performance of any Obligation, nor failure to exercise any right or remedy
hereunder, shall constitute a waiver of any such failure to pay or breach
of any such Obligation, or of the later exercise of such right or remedy.
7.2 ABANDONMENT. Any and all Personalty that upon foreclosure of the lien of
-----------
this Mortgage is owned by Mortgagor and is used in connection with the
operation of the Property shall be deemed at the option of Mortgagee to
have become on such date a part of the Property and abandoned to Mortgagee
in its then condition.
7.3 NOTICES All notices or other written communications hereunder shall be
-------
deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged, (ii) one
business day after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three business days after
having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified
mail, postage prepaid, addressed as follows-.
If to Mortgagor: Overseas Partners (333) Inc.
c/o Overseas Partners Capital Corp.
115 Perimeter Center Place Suite 940
Atlanta, Georgia 30346
Attention: Legal Department
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<PAGE>
With a copy to: Overseas Partners Capital Corp.
Mintflower Place
P. 0. Box HM 1581
8 Par-la-Ville Road
Hamilton, HM GX Bermuda
Attention: Legal Department
and to: Katten, Muchin & Zavis
525 W. Monroe Street
Suite 2100
Chicago, Illinois 60661
Attention: Nina B. Matis, Esq.
If to Mortgagee: The Prudential Insurance Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Vice President, Asset Management
Telephone: 770/395-8600
Facsimile: 770/396-9426
With a copy to: Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: David A. Lapins, Esq.
Telephone: 312/876-8000
Facsimile: 312/876-7934
or addressed as such party may from time to time designate by written notice to
the other parties.
7.4 SEVERABILITY. If any provision hereof should be held unenforceable or
------------
void, that provision shall be deemed severable from the remaining
provisions and in no way affect the validity of this Mortgage, except that
if such provision relates to the payment of any monetary sum, then
Mortgagee may, at its option, declare the Indebtedness immediately due and
payable.
7.5 JOINDER OF FORECLOSURE. Should Mortgagee hold any other or additional
----------------------
security for the performance of the Obligations, its sale or foreclosure,
upon any default in such performance, in the sole discretion of Mortgagee,
may be prior to, subsequent to, or joined or otherwise contemporaneous with
any sale or foreclosure hereunder.
7.6 GOVERNING LAW This Mortgage shall be governed by and construed in
-------------
accordance with the laws of the State of Illinois.
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<PAGE>
7.7 Subordination. At the option of Mortgagee, this Mortgage shall become
-------------
subject and subordinate in whole or in part (but not with respect to
priority of entitlement to any insurance proceeds, damages, awards, or
compensation resulting from damage to the Property or condemnation or
exercise of power of eminent domain), to any and all contracts of sale
and/or any and all Leases upon the execution by Mortgagee and recording
thereof in the appropriate real estate records office of the county where
the Land is located of a unilateral declaration to that effect. Mortgagee
may require the issuance of such title insurance endorsements to the title
policy in connection with any such subordination as Mortgagee, in its
reasonable judgment, shall determine are appropriate, and Mortgagor shall
pay any cost or expense incurred in connection with the issuance thereof.
7.8 WAIVER OF STATUTE OF LIMITATIONS. Mortgagor hereby waives, to the full
--------------------------------
extent allowed by law, the right to plead any statute of limitations as a
defense to any obligation secured by this Mortgage.
7.9 WAIVER OF REDEMPTION. Mortgagor acknowledges that the Premises does not
--------------------
constitute agricultural real estate, as such term is defined by applicable
law. To the fullest extent permitted by applicable law, Mortgagor hereby
waives any and all right of redemption.
7.10 ENTIRE AGREEMENT. The Loan Documents set forth the entire understanding
----------------
between Mortgagor and Mortgagee relative to the Loan and the same shall not
be amended except by a written instrument duly executed by each of
Mortgagor and Mortgagee. The foregoing notwithstanding, the terms and the
conditions of the Application shall survive the funding of the Loan, but in
the event of any conflict between the provisions of the Application and any
of the other Loan Documents except as ' otherwise specifically provided
herein, the terms of such other Loan Documents shall control.
7.11 OTHER SECURITY INSTRUMENTS. If Mortgagee at any time holds additional
--------------------------
security for any obligations secured hereby, it may enforce the terms
thereof or otherwise realize upon the same, at its option, either before or
concurrently herewith or after a sale is made hereunder, and may apply the
proceeds to the Indebtedness without affecting the status of or waiving any
right to exhaust all or any other security, including the security
hereunder, and without waiving any breach or default or any right or power
whether exercised hereunder or contained herein or in any such other
security.
7.12 CHARGES FOR STATEMENTS. Mortgagor will pay Mortgagee's charge, up to the
----------------------
maximum amount permitted by law, for any statement regarding the
Obligations requested by Mortgagor or in its behalf, subject to SECTION
-------
2.19(C) hereof.
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7.13 USURY. In the event that Mortgagee determines that any charge, fee or
-----
interest paid or agreed to be paid in connection with the Loan may, under
the applicable usury
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<PAGE>
laws, cause the interest rate on the Loan to exceed the maximum permitted
by law, then such charges, fees or interest shall be reduced and any
amounts actually paid in excess of the maximum interest permitted by such
laws shall be applied by Mortgagee to reduce the outstanding principal
balance of the Loan. The parties intend that Mortgagor shall not be
required to pay, and Mortgagee shall not be entitled to collect, interest
in excess of the maximum legal rate permitted under the applicable usury
laws.
7.14 PUBLICITY. Mortgagee, at its expense, and as consented to by Mortgagor,
---------
may publicize the financing of the Property.
7.15 INFORMATION REPORTING UNDER IRS SECTION 6045(E). Any information returns
-----------------------------------------------
or certifications that must be filed with the Internal Revenue Service
and/or provided to other parties pursuant to Internal Revenue Code Section
6045(e) shall be prepared, filed by and sent to the appropriate parties by
Mortgagor. To the extent permitted by law, Mortgagee shall have no
responsibility to perform such services; provided however, that upon demand
Mortgagor shall reimburse Mortgagee for any costs incurred by Mortgagee in
doing so and shall also pay such fee as Mortgagee may reasonably and
lawfully request.
7.16 DESTRUCTION OF NOTE. Mortgagor shall, if the Note is mutilated or
-------------------
destroyed by any cause whatsoever, or otherwise lost or stolen and
regardless of whether due to the act or neglect of Mortgagee, execute and
deliver to Mortgagee in substitution therefor a duplicate promissory note
containing the same terms and conditions as the Note, within ten (10) days
after Mortgagee notifies Mortgagor of any such mutilation, destruction,
loss or theft of the Note. Any new promissory note executed and delivered
hereunder shall be in full substitution for the Note, shall not constitute
any new or additional indebtedness of Mortgagor to Mortgagee, shall
constitute solely a substitute evidence of the Indebtedness evidenced by
the original Note, and shall not affect in any manner the priority of this
Mortgage, or any other document or instrument executed in connection with
or evidencing or securing the Indebtedness under the Note. Failure or
delay by Mortgagee to notify Mortgagor hereunder shall not affect in any
manner Mortgagor's liability for the Indebtedness under the Note or
Mortgagor's obligation to execute a new promissory note hereunder; and
Mortgagor's failure to execute a new promissory note on Mortgagee's request
hereunder shall likewise not affect Mortgagor's liability for the
Indebtedness under the Note.
7.17 INDEMNIFICATION AND DEFENSE.
---------------------------
A. Mortgagor will pay and indemnify, defend, and hold Mortgagee and its
agents harmless from and against all liability, loss, claims, damage, cost
or expense (including the reasonable fees and costs of attorneys retained
by Mortgagee together with the allocated costs of internal legal counsel)
that Mortgagee might incur (i) in connection with the making, administering
and/or servicing of the Loan (including
-41-
<PAGE>
brokerage commissions or fees of any kind with respect to the Application
or commitment issued pursuant thereto or the Loan), (ii) the enforcement of
any of Mortgagee's rights or remedies under the Loan Documents, (iii) by
reason of any failure of any representation or warranty made by Mortgagor
or the failure of Mortgagor to perform any Obligation, or (iv) by reason or
in defense of any and all claims and demands whatsoever that may be
asserted against Mortgagee arising out of or in connection with the
Property or the Loan.
B. Whenever, under any Loan Document, Mortgagor is obligated to indemnify
and/or defend Mortgagee, or Mortgagor is obligated to defend or prosecute
any action or proceeding, then Mortgagee shall have the right to
participate in such prosecution or defense using counsel of Mortgagee's
choice, and all costs and expenses incurred by Mortgagee in connection with
such participation (including reasonable attorneys' fees and costs) shall
be reimbursed by Mortgagor to Mortgagee. In addition, Mortgagee shall have
the right to approve any counsel retained by Mortgagor in connection with
the prosecution or defense of any such action or proceeding by Mortgagor.
Mortgagor shall give notice to Mortgagee of the initiation of all
proceedings prosecuted or required to be defended by Mortgagor, or which
are subject to Mortgagor's indemnity obligations, under this Mortgage,
promptly after the receipt by Mortgagor of notice of the existence of any
such proceeding, but in no event later than five (5) days thereafter.
C. Should Mortgagee incur any liability, loss, claim, damage, cost or
expense required to be reimbursed by Mortgagor to Mortgagee hereunder and
Mortgagor does not reimburse Mortgagee within ten (10) days after written
notice to Mortgagor, the amount thereof with interest thereon at the
Default Rate shall constitute part of the Indebtedness, shall be payable by
Mortgagor upon demand and shall be secured by this Mortgage.
D. Mortgagor's obligations under this PARAGRAPH 7.17 shall not be
--------------
affected by the absence or unavailability of insurance covering any such
obligations or by the failure by or refusal of any insurance carrier to
perform any obligations on its part under any such insurance policy.
7.18 SUCCESSORS AND ASSIGNS.
----------------------
A. The provisions hereof shall be binding upon Mortgagor and the heirs,
devises, representatives, successors and assigns of Mortgagor, including
successors in interest of Mortgagor in and to all or any part of the
Property, and shall inure to the benefit of Mortgagee and its heirs,
successors, substitutes and assigns. All references in this Mortgage to
Mortgagor, or Mortgagee shall be construed as including all of such other
persons with respect to the person referred to. Where two or more Persons
have executed this Mortgage, the obligations of such Persons shall be joint
and
-42-
<PAGE>
several, and each reference to Mortgagor herein shall mean each of such
Persons, except to the extent the context clearly indicates otherwise.
B. Mortgagee shall have the right, in its sole discretion, at any time and
from time to time, to sell, assign, syndicate, participate out, or
otherwise transfer and/or dispose of all or any portion of its interest in
this Mortgage, the Note and the Obligations (provided that such transfer
is not made to an entity that would materially adversely affect Mortgagor's
ERISA representations and warranties under the Loan Documents), and, in
connection therewith, Mortgagor hereby covenants and agrees that it will
(i) permit Mortgagee and any prospective successor or participant
Mortgagee, or any of their respective agents, access to the Premises during
reasonable hours for inspection of same, and (ii) permit Mortgagee to
submit to third parties any financial data and other information furnished
by Mortgagor or any other person to Mortgagee in connection with the
operation of the Premises. Any such third parties will agree to be bound
by a confidentiality agreement. Mortgagor further covenants and agrees
that, at the request of Mortgagee and in connection with any such sale,
assignment or other transfer, Mortgagor shall cooperate as requested, and
shall provide such representations, warranties, agreements and documents as
are customary and usual in the marketplace or as may be reasonably required
by Mortgagee in any such sale, assignment or other transfer, and shall use
diligent efforts to obtain such documents and agreements from tenants and
other third parties as may be reasonably requested (provided that Mortgagor
shall not be required to incur (i) any liability beyond the scope of the
Loan Documents, or (ii) any material expense).
7.19 INTERPRETATION. When the identity of the parties or other circumstances
--------------
make it appropriate, the masculine gender shall include the feminine and/or
neuter, and the singular number shall include the plural. Specific
enumeration of rights, powers and remedies of Mortgagee and of acts which
they may do and of acts Mortgagor must do or not do shall not exclude or
limit the general. The headings of each Article and Paragraph are for
convenience and do not limit or construe the contents of any provision
hereof. The provisions of the Loan Documents shall be construed as a whole
according to their common meaning, not strictly for or against any party
and consistent with the provisions herein contained, in order to achieve
the objectives and purposes of such documents. Each party and its counsel
has reviewed and revised the Loan Documents and agree that the normal rule
of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of
such document. The use in the Loan Documents of the words "including",
"such as", or words of similar import when following any general term,
statement or matter shall not be construed to limit such statement, term or
matter to the specific items or matters, whether or not language of non-
limitation such as "without limitation" or "but not limited to", or words
of similar import are used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall
within the broadest possible scope of such statement, term or matter.
References to "foreclosure" and related phrases shall be deemed references
to
-43-
<PAGE>
the appropriate procedure in connection with Mortgagee's private power of
sale, if any, as well as any judicial foreclosure proceeding or a
conveyance in lieu of foreclosure.
7.20 COMMINGLING OF FUNDS. Any and all sums collected or retained by Mortgagee
--------------------
hereunder (including insurance and condemnation proceeds and any deposits
made by Mortgagor with Mortgagee or any agent thereof) shall not be deemed
to be held in trust, and Mortgagee may commingle such funds or proceeds
with its general assets and shall not be liable for the payment of any
interest or other return thereon, except to the extent otherwise required
by law.
7.21 SURVIVAL. All representations, warranties and covenants of Mortgagor
--------
contained in this Mortgage or any other Loan Document, or incorporated by
reference herein or therein, shall survive the execution and delivery of
this Mortgage and shall remain continuing covenants, warranties and
representations of Mortgagor so long as any portion of the Obligations
remains outstanding, except to the extent otherwise expressly provided to
the contrary.
7.22 ADDITIONAL SECURITY. No other security now existing, or hereafter taken,
-------------------
to secure the Obligations shall be impaired or affected by the execution of
this Mortgage; and all additional security shall be taken, considered and
held cumulatively. The taking of additional security, execution of partial
releases of the security, or any extension of the time of payment of the
Indebtedness shall not diminish the force, effect or lien of this Mortgage
and shall not affect or impair the liability of any maker, surety,
guarantor or endorser for the payment of said Indebtedness. Neither the
acceptance of this Mortgage nor its enforcement, whether by court action or
pursuant to the power of sale or other powers herein contained, shall
prejudice or in any manner affect Mortgagee's right to realize upon or
enforce any other security now or hereafter held by Mortgagee, it being
agreed that Mortgagee shall be entitled to enforce this Mortgage and any
other security now or hereafter held by Mortgagee in such order and manner
as it may in its absolute discretion determine.
7.23 NO MERGER. So long as any of the Indebtedness shall remain unpaid or
---------
Mortgagor shall have any further obligation under the Loan Documents,
unless Mortgagee shall otherwise consent in writing, the fee estate of
Mortgagor in the Property or any part thereof shall not merge, by operation
of law or otherwise, with any leasehold or other estate in the Property or
any part thereof, but shall always be kept separate and distinct therefrom,
notwithstanding the union of said fee estate and such leasehold or other
estate in Mortgagor or any other Person.
7.24 PERFORMANCE BV MORTGAGOR. If Mortgagor fails to faithfully perform each
------------------------
and, every Obligation to be performed by Mortgagor, Mortgagee, without
demand or notice, may do any or all things necessary to perform the
Obligations of Mortgagor under the pertinent instrument.
-44-
<PAGE>
7.25 RECOVERY OF EXPENSES. All sums expended by Mortgagee in the exercise of
--------------------
any of their rights or remedies under the Loan Documents, including
Mortgagee's rights under PARAGRAPH 2.8, PARAGRAPH 2.9 and PARAGRAPH 7.24
-------------- -------------- --------------
hereof, and all reasonable costs and expenses incurred in connection
therewith (including the reasonable fees and costs of attorneys and
consultants) shall (i) be immediately due and payable on demand, (ii) if
not repaid within ten (10) days after written notice to Mortgagee, accrue
interest at the Default Rate from the date of expenditure by Mortgagee, and
(iii) be added to the Indebtedness and secured by the Loan Documents prior
to any right, title or interest in or claim upon the Property attaching or
accruing subsequent to the lien of this Mortgage.
7.26 STANDARDS OF DISCRETION. Nothing contained in this Mortgage, the Note, or
-----------------------
any other Loan Documents, shall limit the right of Mortgagee to exercise
its business judgment, or act, in a subjective manner with respect to any
matter as to which it has specifically been granted such right or the right
to act in its discretion or judgment hereunder or thereunder, whether
"objectively" reasonable, under the circumstances. Any such exercise shall
not be deemed inconsistent with any covenant of good faith and fair dealing
otherwise implied by law to be a part of this Mortgage; and the parties
intend by the foregoing to set forth and affirm their entire understanding
with respect to the terms, covenants and conditions and standards pursuant
to which their rights, duties and obligations are to be judged, their
performance measured, and the parameters within which Mortgagee's
discretion may be exercised hereunder and under the other Loan Documents.
7.27 COUNTERPARTS. This Mortgage may be executed in any number of counterparts
------------
with the same effect as if all parties hereto had executed the same
document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be
necessary to produce one such counterpart.
7.28 PREPAYMENT. Mortgagor may prepay the Loan only on the terms and conditions
----------
set forth in the Note and Mortgagor will pay Mortgagee the Prepayment
Premiums (as defined in the Note) in respect of any prepayment, whether
voluntary or involuntary, as required by and on the terms and conditions
set forth in the Note.
7.29 FIRPTA CERTIFICATE. In the event of any transfer by Mortgagor of its
------------------
rights hereunder or of any interest in the Property otherwise permitted
under this Mortgage, such transferee shall, as an additional condition to
such transfer, under penalty of perjury, execute and deliver to Mortgagee a
certificate concerning the non-foreign status of such transferee
substantially in the form of the FIRPTA representation and warranties in
the Certificate of Representations and Warranties. Nothing in this
PARAGRAPH 7.29 shall be deemed a modification or waiver of any other
---------------
provision of any of the Loan Documents limiting, prohibiting or otherwise
relating to any Transfer.
-45-
<PAGE>
7.30 LIMITATION ON PERSONAL LIABILITY. Neither Mortgagor nor Guarantor
--------------------------------
(singularly or collectively, the "Exculpated Parties") shall have any
personal liability for the Loan or any obligations set forth in the Loan
Documents. Notwithstanding the preceding sentence, Mortgagee may bring a
foreclosure action or other appropriate action to enforce the Loan
Documents or realize upon and protect the Property (including, without
limitation, naming the Exculpated Parties in the actions, prior to
exhausting all other rights and remedies, either at law or in equity) and
in addition THE EXCULPATED PARTIES SHALL HAVE PERSONAL LIABILITY FOR any
actual losses or damages incurred by Mortgagee on account of:
(i) any environmental indemnity or ERISA indemnity furnished by Mortgagor
or Guarantor in connection with the Loan (including, without limitation,
the hazardous substances and ERISA provisions of the Loan Documents the
Hazardous Substances Remediation and Indemnification Agreement; and the
ERISA Certificate and Indemnification Agreement);
(ii) real estate taxes and assessments relating to the property, if and to
the extent the Exculpated Parties have assumed personal liability therefor
pursuant to Section 2.10 of this Mortgage;
------------
(iii) any security deposits of tenants (A) not turned over to Mortgagee
upon foreclosure, sale (pursuant to power of sale), or conveyance in lieu
thereof, or (B) not turned over to a receiver or trustee for the Property
after his/her appointment;
(iv) any insurance proceeds or condemnation awards neither turned over to
Mortgagee nor used in compliance with the Loan Documents;
(v) the execution by any of the Exculpated Parties of an amendment that
has a financial impact on the terms of the lease or a termination of any
Lease without Mortgagee's prior written consent (if Mortgagee's consent was
required under the Loan Documents), in which event the Exculpated Parties
shall have personal liability for the greater of:
(a) the Present Value (calculated at the Discount Rate) of the
aggregate total dollar amount (if any) by which (1) rental income
and/or other tenant obligations prior to the amendment of such Lease
exceeds rental income and/or other tenant obligations after the
amendment of such Lease or under any subsequent lease for such space,
and (2) landlord obligations after the amendment of such Lease or under
any subsequent lease for such space exceeds landlord obligations prior
to the amendment of such Lease; or
-46-
<PAGE>
(b) any termination fee or other consideration paid, less the actual,
reasonable costs paid to a third party for reletting such space and any
reasonable amounts applied to pay the pro rata operating costs of such
--------
space; and
(c) if the amendment or termination involves a Lease with a Major
Tenant, an amount equal to twice the greater of (A) or (B) above
regardless of whether the actual losses or damages incurred by
Mortgagee on account of such amendment or termination are less than
such amount.
(vi) physical waste of the Property;
(vii) any rents or other income from the Property received by any of the
Exculpated Parties during the continuance of an Event of Default under the
Loan Documents and not otherwise applied to the indebtedness under the Note
or to the operating and capital expenses of the Property; PROVIDED,
HOWEVER, THAT THE EXCULPATED PARTIES SHALL HAVE PERSONAL LIABILITY for
amounts paid as expenses to a person or entity related to or affiliated
with any of the Exculpated Parties unless the payments are expressly
permitted in the Loan Documents;
(viii) Mortgagor's failure to maintain any letter of credit required under
the Loan Documents or otherwise in connection with the Loan;
(ix) all reasonable legal fees, including allocated costs of Mortgagee's
staff attorneys, and other expenses incurred by Mortgagee in enforcing the
Loan Documents if Mortgagor contests, delays, or otherwise hinders or
opposes (including, without limitation, the filing of a bankruptcy) any of
Mortgagee's enforcement actions unless (except with respect to bankruptcy)
the final decision rendered is in favor of Mortgagor; or
(x) any material misrepresentation by any of the Exculpated Parties in
connection with the Property, the Loan Documents, the Loan Application or
any other aspect of the Loan.
A. Notwithstanding the foregoing, the EXCULPATED PARTIES SHALL HAVE PERSONAL
LIABILITY for all indebtedness evidenced by the Note and all obligations set
forth in the Loan Documents not to exceed $10,000,000, if:
(i) there shall be any breach or violation of the Due on Sale or
Encumbrance section of this Mortgage; or
-47-
<PAGE>
(ii) there shall be any fraud by any of the Exculpated Parties in
connection with the Property, the Loan Documents, the Loan Application, or
any other aspect of the Loan; or
(iii) the Property or any part thereof shall become an asset in (i) a
voluntary bankruptcy or insolvency proceeding or (ii) an involuntary
bankruptcy or insolvency proceeding which is not dismissed within ninety
(90) days of filing; provided, however, that this subsection d(iii) shall
not apply if an involuntary bankruptcy is filed by Mortgagee. If the
involuntary bankruptcy or insolvency proceeding is not dismissed within
ninety (90) days and the Mortgagor and Guarantor: (a) promptly and
diligently pursued the dismissal of such proceeding; (b) have not
orchestrated nor acquiesced in the filing of such proceeding; and (c) did
not contest Mortgagee's efforts to obtain control of the cash collateral,
then the Exculpated Parties shall not have personal liability because of
the failure to dismiss such proceeding within ninety (90) days.
7.31 BENEFITS OF ACT. Mortgagor and Mortgagee shall have the benefit of all the
---------------
provisions of applicable law, including all amendments thereto which may
become effective from time to time after the date hereof.
-48-
<PAGE>
7.32 WAIVER OF RIGHT TO TRIAL BY JURY. MORTGAGOR HEREBY WAIVES, TO THE FULLEST
--------------------------------
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTER-CLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE APPLICATION, THE
LOAN, THE LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF MORTGAGEE IN
CONNECTION THEREWITH.
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed as of
the day and year first above written.
Mortgagor:
OVERSEAS PARTNERS (333), INC., an
Illinois corporation
By: /s/ Bruce M.Barone
-------------------
Name: Bruce M. Barone
----------------
Title: President and CEO
------------------
GUARANTOR, SOLELY FOR THE PURPOSE OF CONSENTING TO AND BEING
BOUND BY THE PROVISIONS OF 2.10, 2.17, 2.18, 7.30 AND 7.32
HEREOF:
OVERSEAS PARTNERS CAPITAL CORP.,
a Delaware corporation
By: /s/ Thomas E. Butler
---------------------
Name: Thomas E. Butler
----------------
Title: Vice President
---------------
-49-
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF FORSYTH )
I, Elise R. Kitchens, a Notary Public in and for said County, in the State
-----------------
aforesaid, DO HEREBY CERTIFY that the foregoing instrument was acknowledged
before me this 27/th/ day of August by Bruce M. Barone, as a duly authorized
------ ------- ---------------
signatory and President and CEO of OVERSEAS PARTNERS(333), INC., an Illinois
------------------
corporation, on behalf of said corporation.
GIVEN under my hand and Notarial Seal this 27/th/ day of August, 1997.
------ ------
/s/ Elise R. Kitchens
---------------------
My Commission Expires:
12/12/2000
- ----------
-50-
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF FORSYTH )
I, Elise R. Kitchens, a Notary Public in and for said County, in the State
-----------------
aforesaid, DO HEREBY CERTIFY that the foregoing instrument was acknowledged
before me this 27/th/ day of August by Thomas E. Butler, as a duly authorized
------ ------- ----------------
signatory and Vice President of OVERSEAS PARTNERS CAPITAL CORP., a Delaware
---------------
corporation, on behalf of said corporation.
GIVEN under my hand and Notarial Seal this 27/th/ day of August, 1997.
------ ------
/s/ Elise R. Kitchens
---------------------
My Commission Expires:
12/12/2000
- ----------
-51-
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
Parcel 1:
Lots 7, 8 and 9 in Assessor's Division of Lots 1, 2, 3, 7 and 8 and the East 20
feet of Lot 6 in Block 21 in Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the Third Principal Meridian, in Cook County, Illinois.
Parcel 2:
The East 1/4 of Lot 6 and the West 1/4 of Lot 7 in Block 21 in Original Town of
Chicago, otherwise known as Lots 10 and 11 in Assessor's Division of Lots 1, 2,
3, 7 and 8 and the East 20 feet of Lot 6, all in said Block 21 in Original Town
of Chicago, in the City of Chicago, in Cook County, Illinois.
Parcel 3:
All of Lot 5 and the West 1/2 of Lot 6 and the West 1/2 of the East 1/2 of Lot
6, all in Block 21 in the Original Town of Chicago, in Cook County, Illinois.
Parcel 4:
The East 1/4 of Lot 1 and that part of the vacated alley lying South and
adjoining said land in Block 21 in the Original Town of Chicago in Section 9,
Township 39 North, Range 14, East of the Third Principal Meridian, in Cook
County, Illinois.
Parcel 5:
The West 1/2 of the East 1/2 of Lot 1 and that part of the vacated alley lying
South and adjoining said land in Block 21 in Original Town of Chicago in the
South fractional 1/2 of Section 9, Township 39 North, Range 14, East of the
Third Principal Meridian, in Cook County, Illinois.
Parcel 6:
Lots 3, 5 and 6 in Assessor's Division of Lots 1, 2, 3, 7 and 8 and the East 20
Feet of Lot 6 in Block 21 in Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the Third Principal Meridian in Cook County, Illinois.
Parcel 7:
The East 1/2 of Original Lot 8 in Block 21 in the Original Town of Chicago in
the South East 1/4 of Section 9, Township 39 North, Range 14, East of the Third
Principal Meridian, sometimes also described as:
Lot 4 in Assessors Division of lots 1, 2, 3, 7, 8 and the East 20 feet of Lot 6
in Block 21 in Original Town of Chicago, in the South East 1/4 of Section 9,
Township 39 North, Range 14, East of the Third Principal Meridian, in Cook
County, Illinois.
Permanent Index Numbers: 17-09-412-013-0000 and 17-09-412-014-0000
Property Address: 333 West Wacker Drive, Chicago, Illinois 60606
-52-
<PAGE>
EXHIBIT B
---------
PERSONAL PROPERTY DESCRIPTION
-53-
<PAGE>
OFFICE OF THE BUILDING
PERSONAL PROPERTY LIST
TYPE OF FURNITURE NUMBER
- --------------------------------------------------------------------------------
Computer stand 1
- --------------------------------------------------------------------------------
Tables:
Conference (Large) 1
Conference (Small) 1
Kitchen (Small) 1
Reception (Small) 2
- --------------------------------------------------------------------------------
Chairs:
Conference Room 10
Executive High Back 3
Kitchen 3
Reception 4
Secretarial 3
Visitors 11
- --------------------------------------------------------------------------------
Desks:
Executive 3
Secretarial 3
- --------------------------------------------------------------------------------
Credenzas 5
- --------------------------------------------------------------------------------
Ice Makers 1
- --------------------------------------------------------------------------------
Bookshelves:
Lateral 4
Vertical 4
- --------------------------------------------------------------------------------
IBM Series II Typewriter 1
- --------------------------------------------------------------------------------
(Spiral) Binding Machine 1
- --------------------------------------------------------------------------------
MIRTECH Security System 1
- --------------------------------------------------------------------------------
Minolta Fax Machine 1
- --------------------------------------------------------------------------------
Pitney Bowes Postage Meter 1
- --------------------------------------------------------------------------------
Postage Scale 1
- --------------------------------------------------------------------------------
Microwave Ovens 1
- --------------------------------------------------------------------------------
Refrigerators 1
- --------------------------------------------------------------------------------
<PAGE>
ENGINEERING DEPARTMENT
PERSONAL PROPERTY LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Quantity Item Quantity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Drill Presses 2 Screw Drivers 20
- ------------------------------------------------------------------------------------------------------------------------------------
Bench Grinders 3 Desks 3
- ------------------------------------------------------------------------------------------------------------------------------------
Horizontal Bandsaw 1 Credenza's 3
- ------------------------------------------------------------------------------------------------------------------------------------
Bearing Press 1 File Cabinets 8
- ------------------------------------------------------------------------------------------------------------------------------------
1983-$1,100 ea Wet/Dry Vacs 4 Chairs 10
- ------------------------------------------------------------------------------------------------------------------------------------
1988-$5,500 ea Refrigerant Recovery Machines 3 Roll Around Tool Box 1
- ------------------------------------------------------------------------------------------------------------------------------------
Hood Volumeter 1 Tap & Die 1
- ------------------------------------------------------------------------------------------------------------------------------------
Compac PC w/Monitor 1 3/4" Drive Socket Set 1
- ------------------------------------------------------------------------------------------------------------------------------------
Laser Jet Printer 1 1/2" Drive Socket Set 1
- ------------------------------------------------------------------------------------------------------------------------------------
Walkie Talkies & Charger 6 3/8" Drive Socket Set 1
- ------------------------------------------------------------------------------------------------------------------------------------
Toshiba Lap-Top 1 Electric Drill Sharpener 1
- ------------------------------------------------------------------------------------------------------------------------------------
Wire Cart 1 Electric Router 1
- ------------------------------------------------------------------------------------------------------------------------------------
Self-Contained Breathing 2 Router Bit Kit 1
- ------------------------------------------------------------------------------------------------------------------------------------
Bench Vises 2 Hole Saw Kit 1
- ------------------------------------------------------------------------------------------------------------------------------------
1983-$3,000 Pipe Threading Machine 1 Glue Gun 1
- ------------------------------------------------------------------------------------------------------------------------------------
Tri-Pod Pipe Vise 1 Combination Wrench 24
- ------------------------------------------------------------------------------------------------------------------------------------
Cordless Drill 3/8' 2 Wood Chisel Set 1
- ------------------------------------------------------------------------------------------------------------------------------------
Cordless Screwdriver 1 Electric Drills 4
- ------------------------------------------------------------------------------------------------------------------------------------
Portable Band Saw 1 Electric Shears 2
- ------------------------------------------------------------------------------------------------------------------------------------
Table Saw 1 Megger 1
- ------------------------------------------------------------------------------------------------------------------------------------
Jig Saw 1 Multimeters 2
- ------------------------------------------------------------------------------------------------------------------------------------
Circular Saw 1 Amphrobe 1
- ------------------------------------------------------------------------------------------------------------------------------------
Sawzall 1 Electronic Circuit Locator 1
- ------------------------------------------------------------------------------------------------------------------------------------
Hand Saw 2 Kilowatt Hour Meter 1
- ------------------------------------------------------------------------------------------------------------------------------------
Hack Saw 2 Charging Sensor 1
- ------------------------------------------------------------------------------------------------------------------------------------
Hammer 5 Electronic Scale 1
- ------------------------------------------------------------------------------------------------------------------------------------
Manometers 2 Chart Recorders 2
- ------------------------------------------------------------------------------------------------------------------------------------
Fire Extinguishers 100 Maghelic 3
- ------------------------------------------------------------------------------------------------------------------------------------
C02 Manlift 1 Oxygen First Aid Kit 1
- ------------------------------------------------------------------------------------------------------------------------------------
1988-$5,328 Electric Manlift 1 Code Key Machine 1
- ------------------------------------------------------------------------------------------------------------------------------------
House Fans 1 Key Duplicative Machine 1 1993-$1,150
- ------------------------------------------------------------------------------------------------------------------------------------
Parts Cabinet 3 Lock Pin Kit 1
- ------------------------------------------------------------------------------------------------------------------------------------
Metal Files 8 Crow Bar 3
- ------------------------------------------------------------------------------------------------------------------------------------
Metal Cabinets 10 Pinch Bar 2
- ------------------------------------------------------------------------------------------------------------------------------------
1983-$3,000 Electric Welders 2 Engine Hoist 1
- ------------------------------------------------------------------------------------------------------------------------------------
1984-$1,100 Scaffold Set 2 Battery Charger 1
- ------------------------------------------------------------------------------------------------------------------------------------
Pipe Wrenches 14 100 h.p. Electric Motor 1 1985-$3,900
- ------------------------------------------------------------------------------------------------------------------------------------
Oxy-Acet Torch Sets 2 75 h.p. Electric Motor 2 1985-$3,700
- ------------------------------------------------------------------------------------------------------------------------------------
Gantry Set 2 40 h.p. Electric Motor 1 1985-$2,800
- ------------------------------------------------------------------------------------------------------------------------------------
2 Ton Electric Hoist 1 30 h.p. electric Motor 2 1985-$2,500
- ------------------------------------------------------------------------------------------------------------------------------------
Chain Falls 1 25 h.p. Electric Motor 1 1985-$2,200
- ------------------------------------------------------------------------------------------------------------------------------------
Vacuum Pumps 2 15 h.p. Electric Motor 1 1985-$2,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bottle Jack 2 Garage Sweeper 1 1989-$22,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pallet Jack 1
- ------------------------------------------------------------------------------------------------------------------------------------
First Aid Kit 1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SECURITY DEPARTMENT
PERSONAL PROPERTY LIST
<TABLE>
<CAPTION>
RADIO NUMBER TYPE QUANTITY
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
03 P-100 01
- --------------------------------------------------------------------------------------------------------------------
04 P-100 01
- --------------------------------------------------------------------------------------------------------------------
05 P-100 01
- --------------------------------------------------------------------------------------------------------------------
10 P-100 01
- --------------------------------------------------------------------------------------------------------------------
11 P-100 01
- --------------------------------------------------------------------------------------------------------------------
12 P-100 01
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL: 06 Radios
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RADIO NUMBER TYPE QUANTITY
- --------------------------------------------------------------------------------------------------------------------
01 P-50 01
- --------------------------------------------------------------------------------------------------------------------
02 P-50 01
- --------------------------------------------------------------------------------------------------------------------
06 SP-50 01
- --------------------------------------------------------------------------------------------------------------------
07 SP-50 01
- --------------------------------------------------------------------------------------------------------------------
08 SP-50 01
- --------------------------------------------------------------------------------------------------------------------
09 SP-50 01
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL: 06 Radios
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RADIO NUMBER TYPE QUANTITY
- --------------------------------------------------------------------------------------------------------------------
18 GP-300 01
- --------------------------------------------------------------------------------------------------------------------
19 GP-300 01
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL: 02 Radios
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RADIO NUMBER TYPE QUANTITY
- --------------------------------------------------------------------------------------------------------------------
13 KSC15 01
- --------------------------------------------------------------------------------------------------------------------
14 KSC15 01
- --------------------------------------------------------------------------------------------------------------------
15 KSC15 01
- --------------------------------------------------------------------------------------------------------------------
16 KSC15 01
- --------------------------------------------------------------------------------------------------------------------
17 KSC15 01
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL: 05 Radios
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL RADIOS: 19 Radios
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
GP-300 Charges Single Unit 02
- --------------------------------------------------------------------------------------------------------------------
06 Unit Charging Station 01
- --------------------------------------------------------------------------------------------------------------------
P-50 Charges Single Unit 05
- --------------------------------------------------------------------------------------------------------------------
P-100 Charges Single Unit 01
- --------------------------------------------------------------------------------------------------------------------
KSC-15 Single Unit 05
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL CHARGERS: 14
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10 (dddd)
<PAGE>
Prudential Loan No. 6-101-882
PROMISSORY NOTE
---------------
$65,000,000.00 August 28, 1997
FOR VALUE RECEIVED, THE UNDERSIGNED, OVERSEAS PARTNERS (333), INC., an
Illinois corporation ("Maker") hereby promise(s) to pay to the order of THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, its successor
or assigns ("Noteholder") the principal sum of Sixty-Five Million and no/ 100
Dollars ($65,000,000.00), with interest on the unpaid principal balance thereof
from the date hereof until maturity at the rate of Seven and 57/100 percent
(7.57%) per annum ("Interest Rate"), both principal and interest being payable
as hereinafter provided in lawful money of the United States of America at 751
Broad Street, Newark, New Jersey 07102-3777, or at such other place as from time
to time may be designated by Noteholder. Interest shall be calculated and paid
on the basis of a 30-day month and 360-day year, other than interest due on the
first Monthly Due Date (as such term is defined below) and the Maturity Date (as
such term is defined below), which shall be calculated based on the actual
number of days in the month and year in which such payments are made.
1. PAYMENTS. Maker agrees to pay Noteholder as follows:
--------
(a) interest only from the date of this Note through October 15, 1997, and
principal in the amount of Seventy-Three Thousand Two Hundred Sixty-
Six and 09/100 Dollars ($73,266.09) shall be due and payable on
October 15, 1997. The first month's payment is an adjusted payment;
and
(b) monthly installment payments of Four Hundred Eighty-Three Thousand
Three Hundred Seven and 76/100 Dollars ($483,307.76) of principal and
interest on the 15th day of November, 1997 and on the same day of each
succeeding month (the "Monthly Due Date") through and including the
15th day of September, 2012 (the "Maturity Date") on which date all
unpaid principal and interest, together with any other sums due under
the terms of this Note, shall be due and payable.
2. TREATMENT OF PAYMENTS. All payments of principal, interest, late
---------------------
charge (as described below), and Prepayment Premium (as described below), if
any, due under this Note, shall be paid to Noteholder by wire transfer of
immediately available funds to such bank or place or by check, and in such other
manner, as Noteholder may from time to time designate. Each installment payment
under this Note shall be applied first to the payment of any unpaid late
August 27, 1997
<PAGE>
charge, then to accrued interest and the remainder to the reduction of unpaid
principal. As to all installment payments, time is of the essence.
3. LATE CHARGES. If any monthly installment of principal and/or
------------
interest is not in full on or before the Monthly Due Date and remains unpaid for
four (4) days after the Monthly Due Date, then a charge for late payment ("Late
Charge") of $250.00 per day (the "Per Diem Late Charge") shall be assessed by
Noteholder and paid by Maker for each day that such payment is not paid
(commencing four (4) days after the Monthly Due Date, but including the date
upon which such payment is made; provided, however, that if any such monthly
principal and/or interest payment, together with all accrued Per Diem Late
Charges, is not made in full on or before the fourteenth (14th) day immediately
following such Monthly Due Date, a Late Charge equal to four percent (4 %) of
the monthly principal and/or interest payment (the "Monthly Late Charge") shall
be deemed to be immediately assessed and shall be immediately due and payable by
Maker. The Monthly Late Charge shall be payable in lieu of and not in addition
to any Per Diem Late Charges that shall have accrued during the two-week period
immediately preceding the assessment of the Monthly Late Charge. The Per Diem
Late Charge and Monthly Late Charge shall be in addition to all other rights and
remedies available to Noteholder upon the occurrence of an Event of Default
under the Loan Documents.
4. DEFAULT INTEREST. In the event and during the continuance of an
----------------
Event of Default under this Note, the Mortgage or any other Loan Documents, or
after the maturity of this Note, interest shall accrue hereunder at an annual
rate of the lesser of (i) the maximum rate allowable by law or (ii) the greater
of (A) Prime Rate plus five percent (5 %) per annum or (B) the Interest Rate
plus five percent (5 %) per annum ("Default Rate"). "Prime Rate" shall mean the
prime rate published in the Wall Street Journal on the date the default occurs.
5. SECURITY. This Note is secured by a Mortgage and Security
--------
Agreement (hereinafter called the "Mortgage") of even date herewith evidencing a
lien on certain real property in Cook County, Illinois, described therein, and
evidencing a security interest in certain personal property, fixtures and
equipment described therein and by other documents to which reference is hereby
made for a description of the property covered thereby, the nature and extent of
the security and the rights and powers of Noteholder in respect to such
security, and for certain terms used in this Note. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Mortgage.
6. EVENT OF DEFAULT. (i) Upon the failure to pay any installment of
----------------
principal and/or interest due on this Note as above promised within four (4)
days after notice by Noteholder (the "Monthly Payment Grace Period"), (ii) upon
the occurrence of an Event of Default specified in any of the Loan Documents, or
(iii) upon the failure to pay any sums due Noteholder other than monthly
installments of principal and interest within ten (10) days after notice by
Noteholder, Noteholder shall have the option of declaring the Indebtedness to be
immediately due and payable (the "Loan Acceleration"). Notwithstanding anything
contained herein to the contrary, in the event that Maker shall fail to pay any
installment of principal and/or interest due on this Note on the Monthly Due
Date more than (i) two (2) times in any twelve month period, or
-2-
August 26, 1997
<PAGE>
(ii) four (4) times in the aggregate during the term hereof, the Monthly Payment
Grace Period shall terminate. Thereafter, upon the failure to pay any
installment of principal and/or interest on the Monthly Due Date, Noteholder
shall have the option of Loan Acceleration. After Loan Acceleration, Noteholder
shall have the option of applying any payments received to principal or interest
or any other costs due pursuant to the terms of this Note or the Loan Documents.
7. PREPAYMENT. Subject to Maker's payment of the premium for early
----------
repayment referred to below and all accrued interest and other sums due under
this Note, the Mortgage and any other Loan Documents, if any, Maker shall have
the right to prepay all or part of the outstanding principal balance of this
Note on any date upon giving not less than ten (10) days prior written notice to
Noteholder of Maker's intention to prepay. If the principal of this Note is
prepaid for any reason, whether voluntarily or involuntarily, or after Loan
Acceleration, exclusive, however, of prepayment from casualty or condemnation
proceeds pursuant to the Loan Documents, Maker shall pay a premium for
prepayment equal to the greater of (a) or (b) (hereinafter called the
"Prepayment Premium") where:
(a) is $0; and
(b) is an amount equal to the Present Value of this Note (as hereinafter
defined) less the amount of principal being prepaid, including accrued interest,
if any, calculated as of the date on which prepayment will be made (hereinafter
called the "Prepayment Date"); provided, however, that in the event the
Prepayment Premium is construed to be interest under applicable law in any
circumstances, in whole or in part, the Prepayment Premium shall not be required
to the extent that the amount thereof, together with other interest payable
hereunder, exceeds the maximum interest that may be lawfully charged under
applicable law.
Noteholder shall notify Maker of the amount (to be determined as of the
Prepayment Date) and basis of determination of the Prepayment Premium. On or
before the Prepayment Date, Maker shall pay to Noteholder the Prepayment Premium
together with the amount of the principal being prepaid and all accrued interest
and other sums due under this Note and the Loan Documents. Noteholder shall not
be obligated to accept any prepayment of the principal balance of this Note
unless such prepayment is accompanied by the Prepayment Premium and all accrued
interest and other sums due under this Note and the Loan Documents.
For purposes of determining the Prepayment Premium, the following terms
shall have the following meanings:
(i) the "Treasury Rate" is the semi-annual yield on the Treasury Constant
Maturity Series with maturity equal to the remaining weighted average
life of the payments due on this Note, for the week prior to the
Prepayment Date, as reported in Federal Reserve Statistical Release H.
15 - Selected Interest Rates, conclusively determined by Noteholder on
the Prepayment Date. The rate will be determined by linear
interpolation between the yields reported in Release
-3-
August 26, 1997
<PAGE>
H. 15, if necessary. In the event Release H. 15 is no longer published
Noteholder shall select a comparable publication to determine the
Treasury Rate.
(ii) The "Discount Rate" is the rate which, when compounded monthly,
is equivalent to the Treasury Rate, when compounded semi-annually.
(iii) The "Present Value" shall be determined by discounting all
scheduled payments of principal and interest remaining to maturity of
this Note, attributed to the amount being prepaid, at the Discount
Rate. If prepayment occurs on a date other than a Monthly Due Date,
the actual number of days remaining from the Prepayment Date to the
next Monthly Due Date will be used to discount within this period.
Maker agrees that Noteholder shall not be obligated to actually reinvest the
amount prepaid in any Treasury obligations as a condition precedent to receiving
the Prepayment Premium.
Notwithstanding the foregoing, no Prepayment Premium will be due if this Note is
prepaid in full or in part within ninety (90) days prior to the Maturity Date.
8. LIMITATION ON PERSONAL LIABILITY. Neither Maker nor Guarantor
--------------------------------
(singularly or collectively, the "Exculpated Parties") shall have any personal
liability for the Loan or any obligations set forth in the Loan Documents.
Notwithstanding the preceding sentence, Noteholder may bring a foreclosure
action or other appropriate action to enforce the Loan Documents or realize upon
and protect the Property (including, without limitation, naming the Exculpated
Parties in the actions, prior to exhausting all other rights and remedies,
either at law or in equity) and in addition THE EXCULPATED PARTIES SHALL HAVE
PERSONAL LIABILITY FOR any actual losses or damages incurred by Noteholder on
account of-.
(i) any environmental indemnity or ERISA indemnity furnished by
Maker or Guarantor in connection with the Loan (including, without
limitation, the hazardous substances and ERISA provisions of the Loan
Documents; the Hazardous Substances Remediation and Indemnification
Agreement; and the ERISA Certificate and Indemnification Agreement);
(ii) real estate taxes and assessments relating to the property, if
and to the extent the Exculpated Parties have assumed personal liability
therefor pursuant to Section 2.10 of the Mortgage;
------------
(iii) any security deposits of tenants (A) not turned over to
Noteholder upon foreclosure, sale (pursuant to power of sale), or
conveyance in lieu thereof, or (B) not turned over to a receiver or
trustee for the Property after his/her appointment;
-4-
August 26, 1997
<PAGE>
(iv) any insurance proceeds or condemnation awards neither turned
over to Noteholder nor used in compliance with the Loan Documents;
(v) the execution by any of the Exculpated Parties of an amendment
that has a financial impact on the terms of the lease or a termination of
any Lease without Noteholder's prior written consent (if Noteholder's
consent was required under the Loan Documents), in which event the
Exculpated Parties shall have personal liability for the greater of:
(A) the Present Value (calculated at the Discount Rate) of
the aggregate total dollar amount (if any) by which (1) rental income
and/or other tenant obligations prior to the amendment of such Lease
exceeds rental income and/or other tenant obligations after the
amendment of such Lease or under any subsequent lease for such space,
and (2) landlord obligations after the amendment of such Lease or under
any subsequent lease for such space exceeds landlord obligations prior
to the amendment of such Lease; or
(B) any termination fee or other consideration paid, less the
actual, reasonable costs paid to a third party for reletting such space
and any reasonable amounts applied to pay the pro rata operating costs
of such space; and
(C) if the amendment or termination involves a Lease with a
Major Tenant, an amount equal to twice the greater of (A) or (B) above
regardless of whether the actual losses or damages incurred by
Noteholder on account of such amendment or termination are less than
such amount.
(vi) physical waste of the Property;
(vii) any rents or other income from the Property received by any of
the Exculpated Parties during the continuance of an Event of Default under the
Loan Documents and not otherwise applied to the indebtedness under the Note or
to the operating and capital expenses of the Property; PROVIDED, HOWEVER, THAT
THE EXCULPATED PARTIES SHALL HAVE PERSONAL LIABILITY for amounts paid as
expenses to a person or entity related to or affiliated with any of the
Exculpated Parties unless the payments are expressly permitted in the Loan
Documents;
(viii) Maker's failure to maintain any letter of credit required under
the Loan Documents or otherwise in connection with the Loan;
(ix) all reasonable legal fees, including allocated costs of
Noteholder's staff attorneys, and other expenses incurred by Noteholder in
enforcing the Loan Documents if Maker contests, delays, or otherwise hinders or
opposes (including, without limitation, the filing of a bankruptcy) any of
Noteholder's enforcement actions unless (except with respect to bankruptcy) the
final decision rendered is in favor of Maker; or
-5-
August 26, 1997
<PAGE>
(x) any material misrepresentation by any of the Exculpated Parties
in connection with the Property, the Loan Documents, the Loan Application
or any other aspect of the Loan.
(a) Notwithstanding the foregoing, the EXCULPATED PARTEES
SHALL HAVE PERSONAL LIABILITY for all indebtedness evidenced by the
Note and all obligations set forth in the Loan Documents not to exceed
$10,000,000, if:
(i) there shall be any breach or violation of the Due
on Sale or Encumbrance section of the Mortgage; or
(ii) there shall be any fraud by any of the Exculpated
Parties in connection with the Property, the Loan Documents, the
Loan Application, or any other aspect of the Loan; or
(iii) the Property or any part thereof shall become an asset in
(i) a voluntary bankruptcy or insolvency proceeding or (ii) an
involuntary bankruptcy or insolvency proceeding which is not
dismissed within ninety (90) days of filing; provided, however, that
this subsection d(iii) shall not apply if an involuntary bankruptcy
is filed by Noteholder. If the involuntary bankruptcy or insolvency
proceeding is not dismissed within ninety (90) days and the Maker
and Guarantor: (a) promptly and diligently pursued the dismissal of
such proceeding; (b) have not orchestrated nor acquiesced in the
filing of such proceeding; and (c) did not contest Noteholder's
efforts to obtain control of the cash collateral, then the
Exculpated Parties shall not have personal liability because of the
failure to dismiss such proceeding within ninety (90) days.
9. NON-USURIOUS LOAN. It is the intent of Noteholder and Maker in
-----------------
this Note and all other Loan Documents now or hereafter securing this Note to
contract in strict compliance with applicable usury law. In furtherance
thereof, Noteholder and Maker stipulate and agree that none of the terms and
provisions contained in this Note, or in any other instrument executed in
connection herewith including but not limited to the Loan Documents, shall ever
be construed to create a contract to pay for the use, forbearance or detention
of money, interest at a rate in excess of the applicable law. Neither Maker nor
any guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Note shall ever be required to pay interest on this Note at a
rate in excess of the maximum interest that may be lawfully charged under
applicable law, and the provisions of this paragraph shall control over all
other provisions of this Note, the Loan Documents and any other instruments now
or hereafter executed in connection herewith which may be in apparent conflict
herewith. Noteholder expressly disavows any intention to charge or collect
excessive unearned interest or finance charges in the event the maturity of this
Note is accelerated. If the maturity of this Note is accelerated for any reason
or if the principal of this Note is paid prior to the end of the term of this
Note, and as a result thereof the interest received for the actual period of
existence of this Note exceeds the applicable maximum lawful rate, Noteholder
shall, at its option, either refund the amount of such excess or credit the
amount of such excess against the principal balance of this Note then
outstanding
-6-
August 26, 1997
<PAGE>
and thereby shall render inapplicable any and all penalties of any kind provided
by applicable law as a result of such excess interest. In the event that
Noteholder collects monies which are deemed to constitute interest which would
increase the effective interest on this Note to a rate in excess of that
permitted to be charged by applicable law, all such sums deemed to constitute
interest in excess of the lawful rate shall, upon such determination, at the
option of Noteholder, be either immediately returned or credited against the
principal balance of this Note then outstanding, in which event any and all
penalties of any kind under applicable law as a result of such excess interest
shall be inapplicable. By execution of this Note, Maker acknowledges that it
believes this Note and all interest and fees paid pursuant to the Loan
represented by this Note, to be non-usurious. Maker agrees that if, at any
time, Maker should believe that this Note or the Loan is in fact usurious, Maker
will give Noteholder notice of such condition and Maker agrees that Noteholder
shall have ninety (90) days in which to make appropriate refund or other
adjustment in order to correct such condition if in fact such condition exists.
The term "applicable law" as used in this Note shall mean the laws of the State
of Illinois or the laws of the United States, whichever allows the greater rate
of interest, as such laws now exist or may be changed or amended or come into
effect in the future.
10. NOTEHOLDER'S ATTORNEYS' FEES. Should the Indebtedness
----------------------------
represented by this Note or any part thereof be collected at law or in equity or
through any bankruptcy, receivership, probate or other court proceedings or if
this Note is placed in the hands of attorneys for collection after default, or
if the lien or priority of the lien represented by the Mortgage is the subject
of any Court proceeding, Maker and all endorsers, guarantors and sureties of
this Note jointly and severally agree to pay to Noteholder in addition to the
principal and interest due and payable hereon reasonable attorneys' and
collection fees including those incurred by Noteholder for any appeal.
11. MAKER'S WAIVERS. Maker and all endorsers, guarantors and
---------------
sureties of this Note and all other persons liable or to become liable on this
Note severally waive presentment for payment, demand, notice of demand and of
dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collecting, and the bringing of suit against any other party, and
agree to all renewals, extensions modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.
12. PAYMENT OF TAXES AND FEES. Maker agrees to pay the cost of any
-------------------------
revenue, tax or other documentary fee or stamps now or hereafter required by law
to be affixed to this Note or the Mortgage.
13. GOVERNING LAW. This Note and the rights, duties and liabilities
-------------
of the parties hereunder and/or arising from or relating in any way to the
indebtedness evidenced by this Note or the transaction of which such
indebtedness is a part shall be governed and construed for all purposes by the
law of the State of Illinois.
-7-
August 26, 1997
<PAGE>
14. WAIVER OF TRIAL BY JURY. MAKER AND ALL EXCULPATED PARTIES HEREBY
-----------------------
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE
LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF NOTEHOLDER; ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
MAKER:
OVERSEAS PARTNERS (333), INC., an Illinois
corporation
By: /s/ Bruce M. Barone
-------------------
Name: Bruce M. Barone
Title: President and CEO
GUARANTOR, SOLELY FOR THE PURPOSE OF CONSENTING TO
AND BEING BOUND BY THE PROVISIONS OF 8 AND 14
HEREOF
OVERSEAS PARTNERS CAPITAL CORP., a Delaware
corporation
By: /s/ Thomas E. Butler
--------------------
Name: Thomas E. Butler
Title: VP
<PAGE>
Exhibit 10 (eeee)
<PAGE>
DARTMOUTH STREET GARAGE
-----------------------
ASSIGNMENT AND ASSUMPTION OF GROUND LEASE
-----------------------------------------
This ASSIGNMENT AND ASSUMPTION OF LEASE (the "ASSIGNMENT") is made as of
January 23, 1997 (the "EFFECTIVE DATE"), BY and between URBAN INVESTMENT AND
DEVELOPMENT CO., an Illinois general partnership ("ASSIGNOR"), and COPLEY PLACE
ASSOCIATES, LLC., a Delaware limited liability company ("ASSIGNEE").
WHEREAS, Assignor is the sole holder of the interest of tenant ("TENANT")
under that certain ground lease, captioned "LEASE INDENTURE", dated as of March
7, 1986, by and between Boston Redevelopment Authority, a public body politic
and corporate, organized under the laws of the Commonwealth of Massachusetts
("LANDLORD"), and Urban Investment and Development Co., a Delaware corporation,
notice of which is recorded with the Suffolk County Registry of Deeds in Book
13215, at Page 125 and filed with the Suffolk County Registry District of the
Land Court as Document No. 415611, as amended by an amendment, captioned
"AMENDMENT TO LEASE", dated December 30, 1986, which Amendment to Lease is
recorded with said Deeds in Book 13321, at Page 244 and filed with said Registry
District as Document No. 416992 and is the subject of a certain Ratification of
Amendment to Lease dated as of January 16, 1997, recorded herewith, by and
between Landlord and Assignor (as so amended, the "GROUND LEASE"), together will
appurtenant rights, privileges and easements thereto (such Tenant's interest and
all and singular and privileges, tenements, hereditaments, easements, rights-of-
way and appurtenances belonging or in anywise appertaining to the same shall be
referred to collectively as the "LEASEHOLD ESTATE"), which encumbers the real
property known as the Dartmouth Street Garage located in the County of Suffolk,
Commonwealth of Massachusetts, and more particularly described in the Ground
Lease and said notice of lease.
WHEREAS, Assignor desires to assign the Leasehold Estate to Assignee, and
Assignee desires to accept such assignment and to assume all of Tenant's
obligations under the Ground Lease first arising or accruing on or after the
Effective Date, on the terms and conditions set forth in this Assignment.
NOW, THEREFORE, in consideration of Twelve Million Nine Hundred Thousand
Dollars ($12,900,000.00) paid, Assignor hereby assigns, transfers and conveys
the Leasehold Estate to Assignee and its successors and assigns, subject to all
easements, encumbrances, restrictions and other matters of record, insofar as
now in force and applicable.
Assignee hereby accepts the foregoing assignment and hereby agrees to
assume and discharge, in accordance with the terms thereof, all of the burdens
and obligations of Tenant under the Ground Lease first arising or occurring on
or after the Effective Date of this Assignment.
<PAGE>
This Assignment may be executed in one or more identical counterparts, each
of which such counterpart shall be deemed an original for all purposes and all
such counterparts collectively consisting of one such Assignment.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as
an instrument under seal as of January 23, 1997.
ASSIGNOR:
---------
URBAN INVESTMENT AND DEVELOPMENT CO.,
an Illinois general partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
Its Managing General Partner
By: /s/ Paul C. Nielson
-------------------
Name: Paul C. Nielson
Title: Senior Vice President
By: /s/ Howard Kogen
----------------
Name: Howard Kogen
Title: Treasurer
ASSIGNEE:
---------
COPLEY PLACE ASSOCIATES, LLC
a Delaware limited liability company
By: JMB Realty Corporation,
a Delaware corporation,
Its Managing Member
By: /s/ Paul C. Nielsen
-------------------
Name: Paul C. Nielsen
Title: Senior Vice President
By: /s/ Howard Kogen
----------------
Name: Howard Kogen
Title: Treasurer
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK ,SS January 23, 1997
Then personally appeared the above named Paul C. Nielsen S.V.P. and of JMB
Realty Corporation, and acknowledged the foregoing instrument to be the free act
and deed of Urban Investment and Development Co., before me,
/s/ Todd Rodman
---------------
Notary Public Todd Rodman
My commission expires: 7/27/01
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK ,SS January 23, 1997
Then personally appeared the above named Paul C. Nielsen S.V.P. and of JMB
Realty Corporation, and acknowledged the foregoing instrument to be the free act
and deed of Urban Investment and Development Co., before me,
/s/ Todd Rodman
---------------
Notary Public Todd Rodman
My commission expires: 7/27/01
<PAGE>
DARTMOUTH GARAGE BILL OF SALE
-----------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the undersigned, URBAN INVESTMENT AND DEVELOPMENT CO., an
Illinois general partnership ("ASSIGNOR"), hereby sells, transfers, assigns and
conveys to COPLEY PLACE ASSOCIATES, LLC, a Delaware limited liability company
("ASSIGNEE"), all right, title and interest of Assignor in and to the 'Personal
Property', 'Property Agreements' and the 'Intangible Property", but only to the
extent the same relate to the "Dartmouth Garage', as each of the foregoing is
defined in that certain Agreement of Purchase and Sale, dated as of December 31,
1996 (the 'PURCHASE AGREEMENT"), by and among Carlyle Real Estate Limited
Partnership - X1ll, an Illinois limited partnership, Assignor, JMB Realty
Corporation, a Delaware corporation, and Overseas Partners Capital Corp., a
Delaware corporation, which provides for, among other things, the sale by
Assignor of its interest in the Dartmouth Garage to Assignee.
The property conveyed hereunder is conveyed by Assignor and accepted
by Assignee AS IS, WHERE IS AND WITHOUT ANY REPRESENTATIONS AND WARRANTIES OF
ANY KIND, CHARACTER OR NATURE, EXPRESS, IMPLIED OR OTHERWISE, IT BEING THE
INTENTION OF ASSIGNOR AND ASSIGNEE EXPRESSLY TO NEGATE AND EXCLUDE ALL
REPRESENTATIONS AND WARRANTIES, INCLUDING WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WARRANTIES
CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF THE
PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL THEREOF, AND ALL OTHER
WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE MASSACHUSETTS UNIFORM
COMMERCIAL CODE, EXCEPT TO THE EXTENT EXPRESSLY CONTAINED IN THE PURCHASE
AGREEMENT.
This Bill of Sale, Assignment and Assumption may be executed in one or
more identical counterparts, each of which such counterpart shall be deemed an
original for all purposes and all such counterparts collectively consisting of
one such Bill of Sale, Assignment and Assumption.
<PAGE>
IN WITNESS WHEREOF, Assignor has executed this Bill of Sale,
Assignment and Assumption as of January 23, 1997.
ASSIGNOR:
---------
URBAN INVESTMENT AND DEVELOPMENT CO.,
an Illinois general partnership
By: JMB Realty Corporation,
a Delaware corporation,
Its General Partner
By: /s/ Paul C. Nielsen
-------------------
Name: Paul C. Nielsen
Title: SVP
<PAGE>
ASSUMPTION
----------
As of the date above written, Assignee hereby accepts the foregoing
Bill of Sale, Assignment and Assumption and hereby agrees to assume and
discharge, in accordance with the terms thereof, all of the burdens and
obligations of Assignor relating to the Property Agreements first arising or
accruing from and after the date hereof.
ASSIGNEE:
---------
COPLEY PLACE ASSOCIATES, LLC,
a Delaware limited liability company
By: JMB REALTY CORPORATION
a Delaware corporation,
Managing Member
By: /s/ Paul C. Nielsen
Name: Paul C. Nielsen
Title: SVP
<PAGE>
Exhibit 10 (ffff)
<PAGE>
Prudential Loan No. 6-101-882
ASSIGNMENT OF AGREEMENTS
------------------------
THIS ASSIGNMENT OF AGREEMENTS (this "Assignment") is made as of August 28,
1997 by OVERSEAS PARTNERS (333), INC., an Illinois corporation ("Borrower") to
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
("Lender").
RECITALS
A. Borrower has executed a promissory note of even date herewith in favor of
Lender in the principal sum of SIXTY-FIVE MILLION DOLLARS ($65,000,000.00)
(such note, together with any modifications, renewals, substitutions or
extensions thereof, is referred to hereinafter as the "Note") to evidence a
loan (the "Loan") from Lender to Borrower in like amount, which Loan is
secured by, among other things, a Mortgage, Security Agreement and Fixture
Filing of even date herewith (the "Mortgage") on the Property and by other
Loan Documents.
B. Borrower has entered into certain agreements pertaining to the operation of
the Property.
C. As a condition to the making of the Loan, Lender has required that Borrower
enter into this Assignment.
D. All capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Mortgage.
AGREEMENT
NOW, THEREFORE, in consideration for the loan and other good and valuable
consideration, Borrower agrees as follows:
1. Assignment. Borrower hereby absolutely and unconditionally sells, assigns,
----------
transfers, sets over, grants a security interest in and delivers to Lender
all of Borrower's right, title and interest in and to all of those
contracts, agreements, commitments, licenses, equipment leases, permits,
warranties, guaranties, plans and specifications, architectural drawings,
approvals and reports relating to the construction, ownership, operation or
use of the Property (each such document is sometimes referred to hereinafter
as an "Agreement" and all such documents are sometimes collectively referred
to hereinafter
<PAGE>
as the "Agreements"), including, without limitation, the agreements, if
any, listed in Exhibit A attached hereto and incorporated herein. Except
-------
as set forth below, this Assignment includes the immediate and continuing
right to collect and receive all sums which may become due to Borrower or
to which Borrower is now or shall hereafter become entitled or may demand
or claim arising or issuing from or out of the Agreements, the right of
Borrower to cure (and to seek reimbursement for the cost of such cure) any
default under the Agreements, the right of Borrower to provide consent or
approval under such Agreements, and the right of Borrower to enforce any
rights and receive any benefits under the Agreements; provided, however, so
long as no Event of Default shall have occurred under any of the Loan
Documents, Borrower shall have a license, revocable upon the occurrence of
an Event of Default, to collect and retain all sums which may become
payable to Borrower under the Agreements, and otherwise exercise all rights
of Borrower with respect thereto, subject to the limitations hereof and of
the Loan Documents.
2. Further Assurances. Borrower agrees to execute and deliver, at its cost,
------------------
upon Lender's request, any documents necessary to cause the specific
assignment of any particular agreement or document whatsoever, the
assignment of which is necessary, proper or desirable in Lender's judgment
to carry out the purposes of this Assignment.
3. Representations, Warranties and Covenants. Borrower hereby represents,
-----------------------------------------
warrants and covenants to Lender that (a) true, correct and complete copies
of the Agreements have been delivered to Lender, including all amendments,
exhibits or addenda thereto; (b) to the best of Borrower's knowledge the
Agreements were duly executed and delivered by the parties thereto and are
enforceable in accordance with their respective terms, except to the extent
limited by applicable bankruptcy, insolvency, liquidation, conservatorship,
receivership or other debtor relief laws affecting the enforcement of
creditor rights generally; (c) to the best of its knowledge no default
exists under any of the Agreements and no fact or circumstance exists under
any of the Agreements which, with the lapse of time or giving of notice or
both, would constitute a default by any party under such Agreements; (d)
Borrower has not previously assigned or otherwise transferred its interests
under any of the Agreements, and will not consent to suffer or permit any
such assignment or transfer without the prior written consent of Lender;
(e) Borrower has performed no act or executed any other instrument which
might prevent Lender from enjoying and exercising any of its rights and
privileges evidenced hereby; and (f) Borrower shall observe, perform, and
discharge duly and punctually all the obligations, terms, covenants,
conditions and warranties to be performed by it pursuant to the Agreements
the failure of which will have a material adverse effect on the Property.
4. Event of Default. The occurrence of an Event of Default under the Loan
-----------------
Documents shall also constitute a default under this Assignment. Lender,
upon the occurrence of an Event of Default, at its option, upon written
notice to Borrower, shall have the right to terminate and revoke the
license hereinabove granted to Borrower and shall have the complete right
and authority then or thereafter to exercise and enforce any and all of its
-2-
<PAGE>
rights and remedies provided herein or by law. Borrower hereby authorizes
and directs the parties named in the Agreements, or the occupants of the
Property, upon receipt from the Lender of written notice to the effect that
an Event of Default exists under the Loan Documents, to cooperate fully
with Lender and to attribute to Lender all of Borrower's rights, powers and
privileges under the Agreements.
5. Nonresponsibility. The acceptance by Lender of this Assignment with all
-----------------
the rights, powers, privileges and authority so granted shall not obligate
Lender to assume any obligations under the Agreements or to take any action
thereunder or to expend any money or incur any expense or perform or
discharge any obligation, duty or liability under the Agreements or to
assume any obligation or responsibility for the nonperformance of the
provisions thereof by Borrower, unless and until Lender becomes the owner
of the Property and elects to continue said Agreements in full force and
effect.
6. Termination of Agreements. Provided either (a) Borrower has the right
-------------------------
pursuant to the subject Agreement to take the following action or (b) the
party to such Agreement other than Borrower consents to such action, upon
the occurrence of an Event of Default under any of the Loan Documents and
acceleration of the indebtedness thereunder, Lender shall have the right to
terminate without payment of any fee or penalty by Lender any Agreement
upon thirty (30) days' advance written notice to the parties to such
Agreement.
7. Power of Attorney. Upon the occurrence of an Event of Default and Lender's
------------------
acceleration of the indebtedness, Borrower does hereby constitute and
appoint Lender its true and lawful attorney-in-fact, which appointment is
coupled with an interest, to (a) exercise any and all rights under the
Agreements, and (b) demand, sue for, collect, attach, levy, recover and
receive any and all sums which may become due to Borrower or to which
Borrower is now or shall hereafter become entitled or may demand or claim,
arising or issuing from or out of the Agreements and to give proper
notices, receipts, releases and acquittances therefor and after deducting
expenses of collection, to apply the net proceeds as a credit upon any
portion, as selected by Lender of the indebtedness evidenced by the Note,
notwithstanding the fact that the amount owing thereunder may not then be
due and payable or that the Note is adequately secured, and Borrower does
hereby authorize and direct the delivery and payment of such sums to Lender
and authorizes Lender to sign and deliver written instructions to this
effect in Borrower's name and stead, and does hereby ratify and confirm all
whatsoever that its said attorney shall do or cause to be done by virtue of
the powers granted hereby. The within appointment shall be irrevocable and
continuing and such rights, powers and privileges shall be exclusive to
Lender, its successors and assigns, so long as any part of the Note shall
remain unpaid; provided, however, Lender shall not exercise any of its
rights or authority as attorney-in-fact prior to the occurrence of an Event
of Default.
8. Exercise of Remedies. Nothing contained herein and no act done or omitted
---------------------
by Lender pursuant to the powers and rights granted it hereunder shall be
deemed to be a waiver by Lender of its rights and remedies under the Note,
the Mortgage or any other Loan
-3-
<PAGE>
Document or a waiver or curing of any default hereunder or under the Note,
the Mortgage or any other Loan Document, and this Assignment is made and
accepted without prejudice to any of the rights and remedies possessed by
Lender under the terms of the Note, the Mortgage and the other Loan
Documents. The right of Lender to collect principal, interest and other
indebtedness secured hereby and by the Mortgage and to enforce any other
security therefor held by it may be exercised by Lender either prior to,
simultaneously with, or subsequent to any action taken by it hereunder.
9. Notices. All notices required to be delivered under this Assignment shall
-------
be made in accordance with the terms and provisions of the Mortgage.
10. Indemnity. Lender shall not be liable for any loss sustained by Borrower
---------
resulting from Lender's exercise of its rights under any of the Agreements,
or from any other act or omission of Lender under this Assignment unless
such loss is caused by the gross negligence or willful misconduct of
Lender. Borrower agrees to indemnify, defend and hold harmless Lender from
and against any and all claims, losses, liabilities, costs and expenses
arising out of or resulting from this Assignment, including, without
limitation, the exercise or enforcement of any of the rights of Lender
hereunder; and Borrower shall reimburse Lender on demand for any and all
sums, including, without limitation, reasonable attorneys' fees and
expenses, incurred by Lender in connection therewith.
11. Termination. This Assignment shall terminate upon payment in full of the
-------------
Indebtedness evidenced by the Note.
12. Successors and Assigns. The covenants and agreements herein contained
----------------------
shall bind and inure to the benefit of the parties hereto and their
successors and assigns.
13. Governing Law. This Assignment shall be governed by and construed in
-------------
accordance with the laws of the State in which the Property is located.
14. Limitation on Personal Liability. Reference is hereby made to the portion
---------------------------------
of the Note entitled "Limitation on Personal Liability" which provision is
hereby incorporated herein by reference to the same extent as if it were
set forth herein.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned Borrower has executed and delivered this
Assignment to Lender and has made it effective as of the date first set forth
above.
BORROWER:
OVERSEAS PARTNERS (333), INC., an Illinois corporation
By: /s/ Bruce M. Barone
-------------------
Name: Bruce M. Barone
Title: President
-5-
<PAGE>
EXHIBIT A
---------
Agreements
<PAGE>
- --------------------------------------------------------------------------------
SERVICE CONTRACTS SUMMARY
- --------------------------------------------------------------------------------
PROPERTY 333 WEST WACKER DRIVE 333 WEST WACKER
OWNERSHIP Overseas Partners (333), Inc. Chicago
GROSS SF 826,632 Lloyd Berry
RENTABLE SF 1983 312/855-0540
YEAR BUILT 08/26/97
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Type of Original Current
Service Contractor Comm. Date Exp. Date Annual Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janitorial Admiral Maintenance Service 09/01/95 08/31/96 $915,483
Security ABM Security 10/01/96 09/30/97 $339,423
Elevator Otis Elevator 01/01/96 12/31/01 $251,568
Exterior Landscaping The Brickman Group,Ltd 04/01/95 11/30/97 $ 7,936
Interior Landscaping Phillip's Interior Plants 05/01/97 04/30/98 $ 21,113
Engineering Unicco Service Company 08/15/96 12/31/98 $540,061
Fire Alarm Advanced Fire & Security 09/01/94 08/31/97 $ 10,500
Systems
Card Access Mirtech 01/01/94 12/31/96 $ 5,500
Parking General Parking Corporation 01/01/95 12/31/96 $ 5,400
Metal Refinishing Metal Maintenance 11/01/95 12/31/98 $ 3,216
Waste Disposal BFI Waste Removal 09/01/97 08/31/98 $ 8,592
Energy Mgmt Landis & Staefa 01/01/94 03/31/98 $ 28,608
Window Washing Chicago Window Cleaning 04/14/97 04/15/98 $ 28,162
Window Equip maint Skyline Maintenance 03/01/93 02/28/96 $ 23,151
Revolving Door maint Midwest Door Services 11/01/93 10/31/97 $ 2,300
Energy Trending Servidyne 01/01/94 12/31/97 $ 384
Exterminating C&C Pest Control 08/01/96 07/31/97 $ 3,380
Water Treatment Nalco $ 15,696
</TABLE>
<PAGE>
EXHIBIT 10 (gggg)
<PAGE>
PREPARED BY AND WHEN
RECORDED RETURN TO:
Caryn L. Chalmers, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Prudential Loan No. 6-101-882
ASSIGNMENT OF LEASES AND RENTS
------------------------------
THIS ASSIGNMENT is made as of this 27th day of August, 1997, by and
---
from OVERSEAS PARTNERS (333), INC., an Illinois corporation's("Assignor"),
to and for the benefit of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation ("Assignee").
RECITALS:
---------
A. Assignor is the owner of certain real property located in Cook
County, State of Illinois more particularly described in Exhibit A attached
hereto ("Property").
B. Assignor has executed and delivered to Assignee a promissory note
("Note") of even date herewith in the original principal amount of SIXTY-FIVE
MILLION DOLLARS ($65,000,000.00) and Assignor has executed and delivered to
Assignee a Mortgage, Security Agreement and Fixture Filing ("Mortgage") of even
date herewith and recorded contemporaneously herewith, securing, among other
things, the obligations of Assignor under the Note and the Mortgage
("Obligations").
C. Assignor desires to transfer and assign to Assignee, absolutely and
unconditionally, all of its right, title and interest in, to and under the
leases described in Exhibit B attached hereto and by this reference incorporated
------- -
herein, and any and all other leases, subleases, lettings and licenses of or
affecting the Property that may hereafter be entered into and all amendments,
extensions, modifications, replacements or renewals thereof (collectively,
"Leases"), and (a) the rents, income and profits due, or to become due '
thereunder, and (b) the right to enforce, whether at law or in equity or by any
other means, all provisions thereof, and all claims of any kind that Assignor
may have against lessees under the Leases or any subtenants or occupants of the
Property (collectively, "Lessees") including, without limitation, any guarantees
of the obligations owed Assignor thereunder (the items described in clauses (a)
and (b) being hereinafter collectively called "Rents"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Mortgage.
<PAGE>
AGREEMENT:
----------
NOW, THEREFORE, as an inducement for the making of the loan evidenced by the
Note and secured by the Mortgage, Assignor hereby represents, covenants and
agrees follows:
1. Assignment. Assignor hereby absolutely and unconditionally transfers,
-----------
sets over and assigns to Assignee all right, title and interest of Assignor in,
to and under (a) the Leases and (b) the Rents. This Assignment is intended to
be and is an absolute present assignment from Assignor to Assignee and not the
mere passage of a security interest or a provision of additional security;
provided, however, that Assignor shall have a license to collect, except as
hereinafter provided, the Rents accruing by virtue of the Leases as they
respectively become due ("License"), but not in advance, and to enforce the
agreements of the Leases. Such License may be revoked, at Assignee's option, in
the event there occurs an Event of Default or breach by Assignor under any of
the terms, covenants or provisions of the Obligations, the Note, the Mortgage,
this Assignment or any other Loan Documents (as defined in the Mortgage).
Assignor covenants and agrees, however, that in exercising its License it shall
hold any and all such Rents in trust for the benefit of Assignee and shall apply
the same in payment of its Obligations, and in accordance with the Loan
Documents.
2. Assignee as Creditor of Lessee. Assignee, and not Assignor, shall be
-------------------------------
the creditor of the Lessees in respect of assignments for the benefit of
creditors and bankruptcy, reorganization, insolvency, dissolution or
receivership proceedings affecting any such Lessee. Assignee, however, shall
not be the party obligated to make timely filings of claims in such proceedings
or to otherwise pursue creditor's rights therein. Assignee shall have the
option to apply any monies received by it as such creditor to the reduction of
the principal of or the premium, if any, or interest on the Obligations.
3. Default Remedies of Assignee. Upon an Event of Default and until such
----------------------------
Event of Default shall have been fully cured, Assignor's License to collect
Rents shall immediately cease and terminate. Assignee shall thereupon be
authorized at its option to enter and take possession of all or part of the
leased premises, and to perform all acts necessary for the operation and
maintenance of such premises in the same manner and to the same extent that
Assignor might reasonably so act. In furtherance thereof, Assignee shall be
authorized, but under no obligation, to collect the Rents arising from the
Leases, and to enforce performance of any other terms of the Leases including,
but not limited to, Assignor's rights to fix or modify rents, sue for possession
of the leased premises, relet all or part of the leased premises, and collect
all Rents under such new Leases. Assignor shall also pay to Assignee, promptly
upon any such default: (a) to the extent permitted by law, all rent prepayments
and security or other deposits paid to Assignor pursuant to any Lease assigned
hereunder; and (b) all charges for services or facilities or for escalation
which have theretofore been paid pursuant to any such Lease to the extent
allocable to any period from and after such default. Assignee will, after
payment of all proper costs, charges and any damages including, without
limitation, those payable pursuant to Paragraph 7 hereof, apply the net amount
-----------
of such Rents to the sums then due to Assignee under the Obligations to the
extent permitted by law. Assignee shall have sole
2
<PAGE>
discretion as to the manner in which such Rents are to be applied, the
reasonableness of the costs to which they are applied, and the items that will
be credited thereby.
4. Termination of Assignment. When Assignor pays Assignee for the full
--------------------------
amount of the indebtedness secured by the Mortgage and this Assignment, and such
payment is evidenced by a recorded satisfaction or release of the Mortgage, this
Assignment shall terminate and become void.
5. Notice to Lessee of Assignor's Default. Assignor hereby irrevocably
---------------------------------------
authorizes each Lessee, upon demand and notice from Assignee of Assignor's Event
of Default under the Obligations, the Mortgage, this Assignment or other Loan
Documents, to pay all Rents under the Leases to Assignee. Assignor agrees that
each Lessee shall have the right to rely upon any such notices of Assignee that
Lessee shall pay all Rents to Assignee, without any obligation to inquire as to
the actual existence of the default, notwithstanding any notice from or claim of
Assignor to the contrary. Assignor shall have no claim against any Lessee for
any Rents paid by Lessee to Assignee. Upon Assignor's cure of all Events of
Default, the Mortgage, this Assignment or other Loan Documents, Assignee may
give each Lessee written notice of such cure and, thereafter, until further
notice from Assignee, the Lessee shall pay the Rents to Assignor.
6. Assignment of Defaulting Assignor's Interest in Lease. If Assignor
------------------------------------------------------
has defaulted under the Obligations, the Mortgage, this Assignment or other Loan
Documents, Assignee shall then have the right to assign Assignor's right, title
and interest in and to the Leases to any person acquiring title to the Property
through foreclosure or otherwise. Such assignee shall not be liable to account
to Assignor for the Rents thereafter accruing.
7. Indemnification of Assignee. Assignor hereby agrees to indemnify,
----------------------------
defend, protect and hold Assignee harmless from and against any and all
liability, loss, cost, expense or damage (including reasonable attorneys' fees)
that Assignee may or might incur under the Leases or by reason of this
Assignment other than liability, loss, cost, expense, or damage incurred as a
result of Assignee's gross negligence or willful misconduct. Such
indemnification shall also cover any and all claims and demands that may be
asserted against Assignee under the Leases or this Assignment. Nothing in this
paragraph shall be construed to bind Assignee to the performance of any Lease
provisions, or to otherwise impose any liability upon Assignee, including,
without limitation, any liability under covenants of quiet enjoyment in the
Leases in the event that any Lessee shall have been joined as party defendant in
any action to foreclose the Mortgage and shall have been barred thereby of all
right, title, interest, and equity of redemption in the Property. This
Assignment imposes no liability upon Assignee for the operation and maintenance
of the Property or for carrying out the terms of any Lease before Assignee has
entered and taken possession of the Property. Any loss or liability incurred by
Assignee, by reason of actual entry and taking possession under any Lease or
this Assignment or in the defense of any claims shall, at Assignee's request, be
reimbursed by Assignor. Such reimbursement shall include interest at the
Default Rate provided in the Note, costs, expenses and reasonable attorneys'
fees. Assignee may, upon entry and taking of possession, collect the Rents and
apply them to reimbursement for any such loss or liability. The provisions of
this
3
<PAGE>
Paragraph 7 shall survive repayment of the Obligations and any termination,
- -----------
satisfaction or foreclosure of this Assignment.
8. Assignor's Possession After Default. If Assignor is in
------------------------------------
possession of any portion of the Property not leased to third party Tenants and
is not required to surrender such possession hereunder upon an Event of Default,
Assignor shall pay monthly in advance to Assignee, on Assignee's entry into
possession pursuant to paragraph 3 hereof, or to any receiver appointed to
-----------
collect the Rents, the fair and reasonable value for the use and occupancy of
the Property or such part thereof as may be in the possession of Assignor. Upon
default in any such payment, Assignor shall forthwith vacate and surrender such
possession to Assignee or such receiver and, in default thereof, Assignor may be
evicted by summary or any other available proceedings or actions.
9. Representations and Warranties. Assignor hereby represents and
-------------------------------
warrants to Assignee that: (a) Assignor is the absolute owner of the Leases,
with absolute right and title to assign the Leases and the Rents; and (b) the
Leases are valid and in full force and effect and have not been modified,
amended or terminated, or any of the terms and conditions thereof waived, except
as stated herein.
10. Lease Terminations and Modificatons. Assignor may do the following
------------------------------------
with respect to Leases (a) Assignor may terminate any Lease (other than the
Lease of a Major Tenant or tenant leasing more than 24,000 square feet) which is
------
in default; (b) Assignor may amend any Lease (other than the Lease of a Major
Tenant or tenant leasing more than 24,000 square feet) provided the amendment
------
does not (i) increase the obligations of the landlord, (ii) decrease or
accelerate the rent, or (iii) decrease the term; and (c) Assignor may enter into
new Leases (or renew existing Leases) for premises of 24,000 square feet or less
------
provided each Lease satisfies the minimum leasing requirements as set forth in
the Mortgage and is on Assignor's standard form lease (approved by Assignee)
with no modifications that increase the obligations of the landlord. Except as
expressly provided in this Section 10 (or after obtaining Assignee's prior
written consent), Assignor shall not (i) amend or modify any Lease, (ii) extend
or renew (except in accordance with the existing Lease provisions, if any) any
Lease (iii) terminate or accept the surrender of any Lease except in accordance
with the terms of any Lease approved or deemed approved by Lender, (iv) enter
into any new Lease of the Property, or (v) accept any prepayment of rent,
termination fee, or any similar payment. Any attempt at cancellation, surrender,
termination, change, alteration, modification, assignment, pledge or
subordination of any Lease, other than as set forth herein, without the prior
written consent of Assignee, shall be null and void.
11. Further Assurances. Assignor shall execute and deliver to Assignee,
-------------------
and hereby irrevocably appoints Assignee, its successors and assigns as its
attorney-in-fact to execute and deliver during the term of this Assignment, all
further instruments as Assignee may deem necessary to make this Assignment and
any further assignment effective. Assignor shall, upon demand, pay to Assignee,
or reimburse Assignee for the payment of, any and all costs and expenses
(including reasonable attorneys' fees) incurred in connection with the
preparation and recording of such instruments.
4
<PAGE>
12. Transfer of Title to Lessee; Cancellation of Lease. Each Lease shall
---------------------------- ----------------------
remain in full force and effect, notwithstanding any merger of Assignor's and
Lessee's interest thereunder. Without Assignee's prior written consent,
Assignor shall not convey title to all or any part of the Property to any
Lessee. If Assignee's consent to any such conveyance is obtained, Assignor
shall not make any such conveyance without first requiring the Lessee, in
writing, to assume and agree to pay and perform the Obligations and the Mortgage
in accordance with the terms, covenants and conditions thereof, and to pay so
much of the purchase price as Assignee deems necessary in reduction of the
outstanding principal of the Obligations, in the inverse order of maturity,
which payment, if made during the period that the Obligations permit prepayment,
will include applicable prepayment premiums as set forth in the Obligations.
Any transfer of title to any Lessee must be performed in compliance with the
provisions of the Mortgage. In the event that any Lease permits cancellation
thereof on payment of consideration and said privilege of cancellation is
exercised, the payments made or to be made by reason thereof are hereby assigned
to Assignee to be applied, at the election of Assignee, to the Obligations and
interest thereon in whatever order the Lender shall choose in its discretion or
to be held in trust by Assignee as further security, without interest, for the
payment of the principal and interest required to be paid by the Obligations.
13. Lease Guaranties; Assignments of Leases; Alterations of Premises.
-----------------------------------------------------------------
Assignor may do the following with respect to lease guaranties, assignments of
leases, and alterations of premises are as follows: (a) Assignor may terminate
any guaranties of any Lease (other than a guaranty of a Lease of a Major Tenant
or tenant leasing more than 24,000 square feet of the Property) which is in
default; (b) consent to any Lease assignment or subletting (other than the Lease
of a Major Tenant or tenant leasing more than 24,000 square feet) provided that
------
any such lease assignment or subletting does not (i) increase the obligations of
the landlord, (ii) decrease or accelerate the rent, or (iii) decrease the term.
Assignor may not, without the written consent of Assignee: (a) execute any other
assignment or pledge of the Leases, of any interest therein, or of any Rents,
or agree to a subordination of any Lease to any mortgage or other encumbrance
now or hereafter affecting the premises; or (b) permit a material alteration of
or addition to the Property by any Lessee, unless the right to alter or enlarge
is expressly reserved by Lessee in the Lease.
14. Assignor to Ensure Continued Performance under Leases. Assignor
------------------------------------------------------
shall perform all of its covenants as Lessor under the Leases, and shall not
permit any release of liability of any Lessee or any withholding of rent
payments by any Lessee. Assignor shall promptly deliver to Assignee copies of
any and all notices of default Assignor has sent to any Lessee. Assignor shall
enforce at Assignor's expense any one or more of the Leases and all remedies
available to Assignor thereunder upon any Lessee's default in accordance with
reasonable past business practices. Assignor shall deliver to Assignee copies
of all papers served in connection with any such enforcement proceedings and
shall consult with Assignee, its agents and attorneys with respect to the
conduct thereof; provided that Assignor shall not enter into any settlement of
any such proceeding without Assignee's prior written consent (except in the case
of a settlement concerning a tenant which is (i) not a Major Tenant, or (ii)
leasing less than 24,000 square feet of the Property).
5
<PAGE>
15. Changes in Obligation Terms. Notwithstanding any variation of the
---------------------------
terms of the Obligations and/or the Mortgage, including any increase or decrease
in the principal amount thereof or in the rate of interest payable thereunder or
any extension of time for payment thereunder or the release of any part of the
Property subject to the Mortgage, the terms of this Assignment shall remain
unmodified and in full force and effect.
16. Additions to and Replacement of Obligations. Assignee may take
--------------------------------------------
security in addition to the security already given Assignee for the payments of
the principal, premium and interest required to be paid in or by the Obligations
or release such other security, and may release any party primarily or
secondarily liable on the Obligations, may grant or make extensions, renewals,
modifications or indulgences with respect to the Obligations or the Mortgage and
replacements thereof, which replacements of the Obligations or the Mortgage may
be on the same terms as, or on terms different from, the present terms of the
Obligations or the Mortgage, and may apply any other security held by it to the
satisfaction of the Obligations, without prejudice to any of its rights
hereunder.
17. Additional Leases. Except as otherwise set forth in the Mortgage,
------------------
Assignor shall not enter into any additional Leases or renew any existing Leases
without the prior written consent of Assignee.
18. Exercise of Assignee's Rights and Remedies. Assignee's failure to
-------------------------------------------
avail itself of any of its rights under this Assignment for any period of time,
or at any time or times, shall not constitute a waiver thereof. Assignee's
rights and remedies hereunder are cumulative, and not in lieu of, but in
addition to, any other rights and remedies Assignee has under the Obligations,
the Mortgage and any other Loan Documents. Assignee's rights and remedies
hereunder may be exercised as often as Assignee deems expedient.
19. Severability. If any term of this Assignment or the application
-------------
hereof to any person or set of circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Assignment, or the application of such
provision or part thereof to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Assignment shall be valid and enforceable to the fullest extent
consistent with applicable law.
20. Captions. The captions or headings at the beginning of each paragraph
---------
hereof are for the convenience of the parties only and are not part of this
Assignment.
21. Counterparts. This Assignment may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, and all of which shall
be construed together and shall constitute one instrument. It shall not be
necessary in making proof of this Assignment to produce or account for more than
one such counterpart.
22. Notices. All notices or other written communications hereunder shall
--------
be deemed to have been properly given: (a) upon delivery, if delivered in person
or by facsimile transmission with receipt acknowledged; (b) one business day
after having been deposited for
6
<PAGE>
overnight delivery with any reputable overnight courier service; or (c) three
business days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, addressed as follows:
If to Assignor: Overseas Partners (333) Inc.
Overseas Partners Capital Corp.
c/o 115 Perimeter Center Place Suite 940
Atlanta, Georgia 30346
Attention: Legal Department
with a copy to: Overseas Partners Capital Corp.
Mintflower Place
8 Par-la-Ville Road
Hamilton, HM GX
P. 0. Box HM 1581
Bermuda
Attention: Legal Department
with a copy to: Katten, Muchin & Zavis
525 W. Monroe Street
Suite 2100
Chicago, Illinois 60661
Attention: Nina B. Matis, Esq.
If to Assignee: The Prudential Insurance
Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia
30346
Attention: Vice President,
Asset Management
Telephone: 770/395-8600
Facsimile: 770/396-9426
with a copy to: Sonnenschein Nath & Rosenthal
Tower
8000 Sears Chicago, Illinois 60606
Attention: David A. Lapins, Esq.
or addressed as such party may from time to time designate by written notice to
the other party.
23. Amendment, Modification or Cancellation of Assignment. No amendment,
------------------------------------------------------
modification or cancellation of this Assignment or any part hereof shall be
enforceable without Assignee's prior written consent.
24. Governing Law. This Assignment shall be governed by and construed in
--------------
accordance with the laws of the state in which the Property is located.
7
<PAGE>
25. Power of Attorney. Effective automatically upon the occurrence of an
------------------
Event of Default and Assignee's acceleration of the indebtedness and
continuously thereafter, and without the necessity of the execution of any
further documents or instruments, Assignor hereby constitutes and appoints
Assignee as Assignor's true and lawful attorney, coupled with an interest, in
the name, place and stead of Assignor:
(a) to collect, demand, sue for, attach, levy, recover and receive all
Rents due and payable by Lessees pursuant to the Leases and to give proper
notices, receipts, releases and acquittances therefor and after deducting
expenses of collection, to apply the net proceeds as a credit upon any portion,
as selected by Assignee, of the Obligations, notwithstanding that the amount
owing thereunder may not then be due and payable or that the Obligation is
adequately secured, and Assignor does hereby authorize and direct such Lessees
to deliver such payment to Assignee in accordance with the foregoing; and
(b) to subject and subordinate at any time and from time to time, the
Leases, to the lien of the Mortgage or any other Loan Documents or any other
mortgage or deed of trust on or to any ground lease of the Property or to
request or require such subordination, where the Assignor otherwise would have
the right, power or privilege so to do. Assignor hereby ratifies and confirms
all acts that Assignee shall do or cause to be done by virtue of the powers
granted hereby and warrants that Assignor has not, on or at any time prior to
the date hereof, exercised any such right of subordination under this clause (b)
and covenants not to exercise any such right except as may be required by
Assignee. The power of attorney hereunder granted is irrevocable and
continuing, shall survive the insolvency or dissolution of Assignor, and such
rights, powers and privileges shall be exclusive in Assignee, its successors and
assigns so long as any part of the Obligations shall remain unpaid.
26. No Mortgagee in Possession; No Other Liability. The acceptance by
-----------------------------------------------
Assignee of this Assignment, with all of the rights, power, privileges and
authority so created, shall not, prior to entry upon and taking of possession of
the Property by Assignee, be deemed or construed to: (a) constitute Assignee as
a mortgagee in possession nor thereafter or at any time or in any event obligate
Assignee to appear in or defend any action or proceeding relating to the Leases
or to the Property; (b) require Assignee to take any action hereunder, or to
expend any money or incur any expenses or perform or discharge any obligation,
duty or liability under the Leases; or (c) require Assignee to assume any
obligation or responsibility for any security deposits or other deposits
delivered to Assignor by Lessees and not assigned and delivered to Assignee.
Assignee shall not be liable in any way for any injury or damage to person or
property sustained by any person in or about the Property.
27. Successors and Assigns; Gender. The terms, covenants, conditions and
-------------------------------
warranties contained herein and the powers granted hereby shall run with the
land, shall inure to the benefit of and bind all parties hereto and their
respective heirs, executors, administrators, successors and assigns, and all
subsequent owners of the Property, and all subsequent holders of the Note and
the Mortgage, subject in all events to the provisions of the Mortgage regarding
transfers of the Property by Assignor. In this Assignment, whenever the context
so requires,
8
<PAGE>
the masculine gender shall include the feminine and/or neuter and the singular
number shall include the plural and conversely in each case. If there is more
than one party constituting Assignor, all obligations of each Assignor hereunder
shall be joint and several.
28. Expenses. Assignor shall pay on demand all costs and expenses
---------
incurred by Assignee in connection with the review of Leases, including the fees
and disbursements of Assignee's outside counsel.
29. Limitation on Personal Liability. Reference is hereby made to the
---------------------------------
portion of the Note entitled "Limitation on Personal Liability", which provision
is hereby incorporated herein by reference to the same extent as if it were set
forth herein.
30. WAIVER OF TRIAL BY JURY. ASSIGNOR HEREBY WAIVES, TO THE FULLEST
------------------------
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THIS ASSIGNMENT, OR ANY ACTS OR OMISSIONS OF
ASSIGNEE IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed by
its duly authorized representative as of the day and year first above written.
ASSIGNOR:
OVERSEAS PARTNERS (333), INC., an Illinois
corporation
By: /s/ Bruce M. Barone
-------------------
Name: Bruce M. Barone
Title: President
9
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF FORSYTH )
I, Elise R. Kitchens, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that the foregoing instrument was acknowledged
before me this 27th day of August by Bruce M. Barone as a duly authorized
signatory of OVERSEAS PARTNERS (333), INC., an Illinois corporation, on behalf
of said corporation.
GIVEN under my hand and Notarial Seal this 27th day of August 1997.
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires:
12/12/2000
10
<PAGE>
EXHIBIT A
Legal Description
Parcel I:
Lots 7, 8 and 9 in Assessors Division of Lots 1, 2, 3, 7 and 8 and the East 20
feet of lot 6 in Block 21 in Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the Third Principal Meridian, in Cook County, Illinois.
Parcel 2:
The East 1/4 of lot 6 and the West 1/4 of Lot 7 In block 21 In Original Town of
Chicago, otherwise known as Lots 10 and 11 In Assessor's division of Lots 1, 2,
3, 7 and 8 and the East 20 feet of lot 6, all in said block 21 in Original Town
of Chicago, In the City of Chicago, In Cook County, Illinois.
Parcel 3:
All of Lot 5 and the West 1/2 of lot 6 and the West 1/2 of the East 1/2 of lot
6, all in Block 21 in the original Town of Chicago, in Cook County, Illinois.
Parcel 4:
The East 1/4 of lot 1 and that part of the vacated allay lying South and
adjoining said land in B1ock 21 in the Original Town of Chicago in section 9,
Township 39 North, Range 14, East of the Third Principal Meridian, in Cook
County, Illinois.
Parcel 5:
The West 1/2 of the East 1/2 of lot 1 and that part of the vacated allay lying
South and adjoining said land in Black 21 in Original Town of Chicago in the
South fractional 1/2 of Section 9, Township 39 North, Range 14, East of the
Third Principal Meridian, in Cook County, Illinois.
Parcel 6:
Lot 3, 5 and 8 in Assesors Division of lots 1, 2, 3, 7 and 8 and the East 20
Feet of Lot 8 In Block 21 In Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the third Principal Meridian In Cook County, Illinois.
Parcel 7:
The East 1/2 of Chicago lot 8 in Block 21 In the Original Town of Chicago in the
South East 1/4 of Section 9, Township 39 North, Range 14, East of the Third
Principal Meridian, sometimes also described as:
Lot 4 in Assesors division of lots 1, 2, 3, 7, 8 and the East 20 feet of Lot 6
in Block 21 in original Town of Chicago, in the South East 1/4 of Section 9,
Township 39 North Range 14, East of the Third principal Meridian, in Cook
County, Illinois.
PIN #17-09-412-013; 17-09-412-014
Commonly known as: 333 West Wacker Drive, Chicago, Illinois
<PAGE>
EXHIBIT B
---------
DESCRIPTION OF LEASES
---------------------
B-1
<PAGE>
TILTON & LEWIS ASSOCIATES
SUITE NO: 200
SqFt-RA: 9522
SHELDON F. GOOD REALTY, INC.
SUITE NO: 450
SqFt-RA: 7150
SANCHEZ & DANIELS
SUITE NO: 500
SqFt-RA: 20886
HAGGERTY, KOENIG & HILL
SUITE NO: 510
SqFt-RA: 3162
FORENSIC TECHNOLOGIES INTERNATIONAL
SUITE NO: 600
SqFt-RA: 6410
ARBOR OFFICE SUITES
SUITE NO: 700
SqFt-RA: 24586
<PAGE>
NYHAN, PFISTER, BAMBRICK & KINZIE
SUITE NO: 810
SqFt-RA: 8212
COMPASS MANAGEMENT & LEASING
SUITE NO: 880
SqFt-RA: 2842
PERFORMANCE ANALYTICS, INC.
SUITE NO: 1010
SqFt-RA: 10199
JAMES, LAYTON INTERNATIONAL, INC.
SUITE NO: 1050
SqFt-RA: 2398
CASSIDAY, SCHADE & GLOOR
SUITE NO: 1100
SqFt-RA: 14513
CARNOW, CONIBEAR & ASSOCIATES, LTD.
SUITE NO: 1400
SqFt-RA: 18818
<PAGE>
FACILITY CAPITAL CORPORATION
SUITE NO: 1750
SqFt-RA: 3562
TETRA PAK, INC.
SUITE NO: 1500/1620
SqFt-RA: 34226
GROSVENOR CAPITAL MGMT, L.P.
SUITE NO: 1610
SqFt-RA: 2427
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
SUITE NO: 1900/2050
SqFt-RA: 32269
BULGARIAN AMERICAN ENTERPRISE
SUITE NO: 2080
SqFt-RA: 2333
URBAN INVESTMENT & DEVELOPMENT
SUITE NO: 2100/2000/2200/2300/2400
SqFt-RA: 94864
<PAGE>
FEDERAL HOME LOAN MORTGAGE
SUITE NO: 2500
SqFt-RA: 25344
BURDITT & RADZIUS, CHTD.
SUITE NO: 2600
SqFt-RA: 25714
BARACK FERRAZZANO, KIRSCHBAUM
SUITE NO: 2700/2850
SqFt-RA: 32278
HORWOOD, MARCUS & BRAUN
SUITE NO: 2800
SqFt-RA: 11010
AMERITECH K.D.S.
SUITE NO: 2900
SqFt-RA: 15612
RAILINC/AAR
SUITE NO: 2950
SqFt-RA: 10061
<PAGE>
JOHN NUVEEN & CO., INC,
SUITE NO: 3300/3100/3200/3400/3500/3600
SqFt-RA: 113675
ECC, Inc.
SUITE NO: BOX2ECC
SqFt-RA: 0
UPS
SUITE NO: BOX1UPS
SqFt-RA: 0
Metropolitan Fiber Systems
SUITE NO: BOX4MET
SqFt-RA: 0
First Chicago Building Corp.
SUITE NO: BOX3CASH
SqFt-RA: 0
HEFTER & RADKE
SUITE NO: 1650
SqFt-RA: 7663
<PAGE>
CASSIDAY, SCHADE & GLOOR
SUITE NO: 1200
SqFt-RA: 34659
BAIN & COMPANY, INC.
SUITE NO: 3000
SqFt-RA: 14998
NATIONAL EQUITY ADVISORS
SUITE NO: 2070
SqFt-RA: 3037
2020 ASSOCIATES
SUITE NO: 2020
SqFt-RA: 4533
FALLON MCELLIGOTT
SUITE NO: 1430
SqFt-RA: 1798
CASSIDAY, SCHADE & GLOOR
SUITE NO: 850
SqFt-RA: 1411
<PAGE>
FEDERAL EXPRESS
SUITE NO: BOX5FEDEX
SqFt-RA: 0
#12 KARAD DRUG CO., INC.
SUITE NO: L020
SqFt-RA: 1200
BARACK, FERRAZZANO, KIRSCHBAUM
SUITE NO: 2860
SqFt-RA: 5043
FEDERAL HOME LOAN MORTGAGE
SUITE NO: 210
SqFt-RA: 9460
KATZ RANDALL & WEINBERG
SUITE NO: 1800/1700
SqFt-RA: 25224
MCI METRO
SUITE NO: BOX6MCI
SqFt-RA: 198
<PAGE>
PEPI CORPORATION
SUITE NO: L010
SqFt-RA: 2439
ROSE AND ASSOCIATES
SUITE NO: 1710
SqFt-RA: 3422
LINDA'S MAGIC NAILS
SUITE NO: M100
SqFt-RA: 868
KENWOOD ASSOCIATES, INC.
SUITE NO: 400
SqFt-RA: 12130
VTEL CORPORATION
SUITE NO: 1060
SqFt-RA: 2410
SPECTRA/MARKET METRICS
SUITE NO: 900
SqFt-RA: 14875
<PAGE>
TELIGENT
SUITE NO: R100
SqFt-RA: 0
FIRSTCORP
SUITE NO: 240
SqFt-RA: 1127
NATIONSCREDIT COMMERCIAL CORP.
SUITE NO: 1840
SqFt-RA: 3702
GROSVENOR CAPITAL MGMT, L.P.
SUITE NO: 1600
SqFt-RA: 6984
GROSVENOR CAPITAL MGMT, L.P.
SUITE NO: 1605
SqFt-RA: 108
BARACK, FERRAZZANO, KIRSCHBAUM
SUITE NO: 2820
SqFt-RA: 3189
<PAGE>
HARRIS, ROTHENBERG INTERNATIONAL
SUITE NO: 1015
SqFt-RA: 1391
JOHN NUVEEN & CO., INC.
SUITE NO: 3010
SqFt-RA: 4835
MANSON VENTURES, INC.
SUITE NO: 1450
SqFt-RA: 1419
CASTLE CREEK PARTNERS, LLC
SUITE NO: 1410
SqFt-RA: 2185
BLATT, HAMMESFAHR & EATON
SUITE NO: M101
SqFt-RA: 0
TETRA PAK INC.
SUITE NO: 250
SqFt-RA: 800
<PAGE>
MACKELVIE & ASSOCIATES
SUITE NO: 950
SqFt-RA: 3924
FACILITY CAPITAL CORPORATION
SUITE NO: 1730
SqFt-RA: 1518
<PAGE>
EXHIBIT C
---------
TENANT PURCHASE OPTIONS, FIRST REFUSAL RIGHTS
---------------------------------------------
AND RIGHTS/OPTIONS FOR ADDITIONAL SPACE
---------------------------------------
<PAGE>
333 West Wacker Drive
Summary of Options to Expand
As of: August 15, 1997
Tilton and Lewis Associates, Inc. (2nd Floor) (5/l/86 - 4/30/01)
- ----------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant had option to
expand into approximately 3,000 sq. ft. on 2nd floor,
effective 5/l/91 with notice to LL by 2/l/90. Option
not exercised
Sheldon F. Good Realty, Inc. (4th Floor) (2/l/87 - 11/30/99)
- ------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant shall have the
option to expand between 1,633 and 2,209 sf of
contiguous space on the 4' Floor. Tenant must occupy
the entire Premises on both the date that Tenant
exercises the Expansion Option and on the Expansion
space Occupancy Date. Tenant may exercise Expansion
Option by giving written notice to LL by 2/15/97.
Within (60) days following LL's receipt of the
Expansion Space Notice, LL shall specify in a written
notice to Tenant the location, size, and
configuration of the Expansion Space. If Tenant
exercises Expansion Option, then commencing 7/l/97,
Expansion space shall be part of Premises except as
hereinafter provided: the annual base rent of the
Expansion Space shall be equal to the square foot
amount of then applicable rent times the rentable
area of the Expansion Space and pro-rate share shall
be adjusted for the Expansion Space.
Kenwood Associates, Inc. (Suite 400 & 460) (3/l/96 - 2/28/2002)
- ---------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant has the right
to expand between 2,635 and 3,525 contiguous rsf in
suite 470. The occupancy date shall be between
3/l/97 -8/l/97 with 4 months prior notice. If Tenant
elects to take the $7.95/sf Expansion Allowance base
rent shall be $5.18/sf the first year growing at
3.65% every March 1st. If Tenant elects to take the
$2.65/sf Expansion Allowance the base rent shall be
the same per sf as the Premises. Pro-rata share shall
be adjusted to reflect Expansion Space.
Sanchez and Daniels (Suite 500) (3/l/92 - 2/28/02)
- --------------------------------------------------
(T) Option to Expand: Tenant has two (2) Expansion Options, as follows
(Notification Date has elapsed):
First Expansion Option:
-----------------------
- Premises: Approximately 3,500 sq. ft. (exact number
to be determined by LL) of contiguous space on 5th
floor, at location to be determined by LL.
- Exercise Date: Notice from Tenant to LL by 3/l/95
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- LL shall notify Tenant by 4/l/95 setting forth
(i) location and square footage (ii) Base Rent;
and (iii) effective date on which LL shall
deliver possession (which date shall be between
9/1/95 - 9/1/96;
- Base Rent: same per sq. ft. amount as for
original premises, including increases.
- Tenant Improvements: $7.50/sq. ft.
- Pro-rata share: shall increase accordingly
Second expansion Option:
------------------------
-Premises: Approximately 3,500 sq. ft. (exact
number to be determined by LL) of contiguous space
on 5th floor, at location to be determined by LL.
In any event, such space shall include the area
located between the midrise elevator lobby on the
5th floor containing approximately 507 sq. ft.
-Exercise Date: Notice from Tenant to LL by 3/l/97
-Availability of Second Expansion Option is not
conditioned on exercise by Tenant of first
Expansion Option.
-LL shall notify Tenant by 4/l/97 setting forth (i)
location and square footage of expansion space; (ii) Base Rent; and (iii)
effective date on which LL shall deliver possession (which date shall be
between 9/l/97 9/l/98)
-Base Rent: same per sq. ft. amount as for original
premises, including increases
-Tenant Improvements: $5.00/sq. ft.
-Pro-rata share: shall increase accordingly
LL shall have right to increase/decrease the
rentable area of either of the Expansion Premises
by not more than 20%, with notice to Tenant no
later than 6 months prior to the Effective Date
with respect to such expansion.
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- ------------------------------------------------------------------------
(T) Option to Expand: Premises: 2,000 sq. ft. (the exact square footage
to be determined by LL) in Building on the same
floor as and contiguous to premises at a location
on such floor to be designed by LL.
-Notice from Tenant to LL by 3/l/96
-If exercised, LL shall give written notice to
Tenant by 4/l/96 specifying; (i) exact location
and number of rentable sq. Ft.; (ii) Base Rent,
which shall be computed as $6.00/sq. ft. Net; and
(iii) the effective date on which LL shall deliver
possession of Expansion Space to Tenant (which
date shall be between 5/1/96 - 1/1/97).
-LL may lease space to another tenant prior to the
expansion date
-LL may change the size of the rentable area of the
Expansion Space upon notice to Tenant by 4/1/96;
provided, LL shall not increase/decrease the
rentable area by more than 15%.
-Tenant improvements shall be $ 1 0.00/sq. ft.
-Pro-rata share shall be increased accordingly.
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMEBRANCES
- --------------------------------------------------------------------------------
Nyhan, Pfister, Bambrick & Kinzie, P.C. (8th Floor) (2/l/92 - 1/31/02)
- ----------------------------------------------------------------------
(T) Option to Expand: Premises: 2,500 sq. ft. of space contiguous and on
the same horizontal plane to the Premises.
(Notification Date has elapsed)
-Effective Date: 2/l/96
-Notice: Either (i) 12/l/94 - 1/31/95 ("Early
Notice Period"); or (ii) 2/l/95-4/30/95 ("Late
Notice Period")
-Base Rent: Same per sq. ft. rates as set forth for
original premises
-TI Allowance: $10.00/sq. ft.
-Pro-rata share: shall increase accordingly.
-If Early Notice Period, LL shall deliver to Tenant
notice by 2/28/95 ("LL's Expansion Notice") (a)
describing layout of Expansion Space; and (b)
setting forth whether there are any changes in (i)
square footage of Expansion Space; or (ii)
Effective Date. Tenant shall have 15 days to
provide notice to LL whether terms of LL's
Expansion Notice are acceptable to Tenant. If
Tenant rejects the terms, Tenant may withdraw it's
notice electing to expand. If withdrawn, Tenant
shall be precluded from exercising said option
during the late Notice Period.
-If exercised during Late Notice Period, then on or
before 5/30/95 LL shall deliver to Tenant "LL's
Expansion Notice" which shall be binding on LL and
Tenant.
-LL may accelerate or defer the Effective Date by a
period of not more than 6 months by so notifying
Tenant at least 8 months prior to the Effective
Date (6/1/95), which notice shall state the new
Effective Date. LL shall maintain right to lease
Expansion Space to another tenant for a term not
to exceed the Effective Date of this Expansion
Option.
-LL may increase/decrease the size of the Expansion
Premises by not more than 10% by so notifying
Tenant at least 8 months prior to the effective
Date (6/1/95).
Spectra Marketing! Systems, Inc. (Suite 900) (7/15/96 - 1/31/05)
- -----------------------------------------------------------------
(T) Option to Expand: 0ption A (Notification Date has elapsed):
---------
Tenant has the right to lease between 2,000 and
3,000 contiguous rsf on the 9th floor. Tenant must
give written notice to LL by 10/15/96. Within 60
days LL shall provide a written notice containing
the location site, configuration and the occupancy
date of the Expansion Space. The Occupancy Date
must be between 1/15/97 and 1/14/98. Rent will be
the same rate as then applicable rate for the
original Premises. LL shall provide $23.00/sf for
Tenant Improvements. Expansion Space will become
part of the Premises and Pro-rata shall be adjusted
accordingly. If LL cannot deliver possession of the
expansion within six (6) months of LL's specified
Date, Tenant may rescind.
Option B:
---------
If Tenant does not exercise Expansion Option A,
Tenant may exercise Expansion Option B by giving
written notice to LL by 10/15/99. Within 60 days LL
shall provide a written notice containing the
location site, configuration and the occupancy date
of the Expansion Space. The Occupancy date must be
between 1/15/2000 and 1/14/2001. Rent will be
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
the same rate as then applicable rate for the
Original Premises. LL shall provide $ 15.00/sf for
Tenant Improvements. Expansion Space will become
part of the Premises and Pro-rata shall be adjusted
accordingly.
Cassiday, Schade & Gloor (11th and 12th Floors -- 34,659 sq. ft.) (3/l/83 -
- ---------------------------------------------------------------------------
2/28/98)
- --------
(T) Option to Expand: Tenant has three (3) expansion options, as follows
(Notification Dates have elapsed):
First Expansion Option (independent of 2nd & 3rd
----------------------
Options)
Premises: 2,842 sq. ft. on 8th floor - Effective
Date: 6/l/90, 6/l/92 or 12/l/94 (first availability
based upon existing tenancies)
-Notice Date: 18 months prior to latest Effective
Date
Second Expansion Option (independent of 1st and 3rd
-----------------------
Options)
-Premises: 13,532 sq. ft. on 8th floor - Effective
Date: 7/l/90 or 11/l/94 (first availability based
upon existing tenancies)
-Notice Date: 18 months prior to latest Effective
Date
Third Expansion Option (independent of 1st and 2nd
----------------------
Options)
-Premises: 8,212 sq. ft. on 8th floor (balance of
8th floor)
-Effective Date: 1 1/24/89 or 12/l/94 (first
availability based upon existing tenancies)
-Notice Date: 18 months prior to latest Effective
Date
All above described Expansion Options have the
following terms:
-Rent: 100% of market. LL shall notify Tenant of
its determination of such FMV within 90 days of
Tenant's notice to LL exercising it's expansion
option. If Tenant and LL cannot agree on Base Rent,
Tenant may cancel its election to lease such
additional space in written notice to LL within 30
days after LL's notice to Tenant specifying such
Base Rent. - Tenant Improvements: None. Space to be
taken "as is" except LL shall make any repairs to
such space made necessary by fire or casualty.
- Pro-rata Share: To be increased accordingly.
NOTE: Based upon the 18 month Tenant notification
period, Tenant's rights under these expansion
options have expired.
Carnow, Conibear & Associates, Ltd. (14th Floor) (9/15/85 - 12/31/03)
- ---------------------------------------------------------------------
(T) Option to Expand: First Expansion Option:
-----------------------
-Premises: 3,235 sq. ft. on 14th floor (see
attached)
-Notice to LL: By 7/1/98.
-Effective Date: Between 10/l/98 and 7/l/99
(Landlord shall notify Tenant of Effective Date
within 30 days after exercise).
-Base Rent: Rate per sf for the remainder of
Premises, including increases.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Tenant Improvements: $20.00/sf (any unused
allowance shall be applied towards first rents
due).
Second Expansion Option:
------------------------
-Premises: 2,211 sf on 14th floor, currently
leased to Broker Investment Management (see
attached).
-Notice to LL: By 3/15/01.
-Effective Date: Between 9/15/01 and 3/15/02
(Landlord shall notify Tenant of Effective Date
within 30 days after exercise).
-Base Rent: Rate per sf for remainder of Premises,
including increases.
-Tenant Improvements: None
NOTE: Second expansion rights are subject to the
rights of Broker Investment Management to exercise
its option to renew.
-LL may lease such space to other tenants prior to
Effective Date; however, if LL does not deliver
possession on or before 150th day following the
Effective Date, Tenant may withdraw exercise of
expansion option by delivering notice to LL by the
160th day following the scheduled Effective Date.
Tetra Pak, Inc. (15th & 16th Floors) (9/l/91 - 8/31/01)
- -------------------------------------------------------
(T) Option to Expand: Tenant had option to expand into approximately
16,000 sq. ft. on either floor contiguous to
premises with notice to LL by 1/l/93. Not
exercised.
(T) Option to Expand: Tenant may expand into 1,500 - 2,000 sf on the 16th
floor, upon notice to LL between 9/l/96 - 9/8/97.
LL shall have 10 business days after receipt of
Tenants election to exercise to notify Tenant of
exact location and square footage and the effective
date ("Expansion Space Addition Date," which shall
between 12/l/97 - 9/l/98). The Base Rent shall be
equal to the then applicable fair market value
rent. If Tenant disagrees with LL's determination
of the fair market value rent then Tenant may
cancel exercise of expansion option via notice to
LL within 30 days of LL's notice to Tenant
specifying Base Rent.
Option to expand is subject to the rights of Hefter
Radke to lease the Expansion Space.
Grosvenor Capital Management, L.P. (16th Floor) (3/l/93 - 5/31/99)
- ------------------------------------------------------------------
(T) Option to Expand: (EXPIRED) Notice Date was between (3/l/96 -
5/31/96). Tenant did not exercise per Property
Manager.
Hefter & Radke (Suite 1650) (4/15/89 - 2/28/01)
- -----------------------------------------------
(T) Option to Expand: Tenant may expand into 1,629 sf of additional space
that is contiguous with the eastern wall of the
Premises on the 16th floor (ie; Suite 1660), upon
Page 5
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
notice to LL by 9/l/97, such Expansion to be
effective 9/l/98.. The Base Rent shall be equal to,
and increase with, the then applicable rental rate
per sq. ft. for the Premises. Tenant shall receive
a T.I. allowance of $20.00/rsf of Expansion Space.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- -------------------------------------------------------------
(T) Option to Expand: Premises: Same as Right of First Refusal ("ROFR")
space described above (1,780 sq. ft. - 17th floor).
-Available at any time during initial term, if
Tenant has not waived rights to such space pursuant
to ROFR above.
-Tenant shall exercise by giving written notice to
LL. LL shall give written notice to Tenant within
10 days following receipt of Tenant's notice
setting forth the date on which LL shall deliver
possession of the Option Space.
-Base Rent and tenant improvements described above
for the ROFR are applicable.
-LL retains the right to lease Option Space to
another tenant, subject to rights of Tenant
pursuant to ROFR.
Katz Randall & Weinbere (1700 & 1800) (11/l/95 - 4/30/08)
- ---------------------------------------------------------
(T) Put Space: Tenant shall lease approximately 3,500 sf (see
attached) on the 17th floor effective 12/l/98. LL
may reduce the size of the put space, but not less
than 3,000 sf, provided such decrease does not
destroy the contiguity to the Premises, in a way
that is reasonably acceptable to the Tenant. LL
shall notify Tenant by 8/l/98 as to the rentable
area to be included. Rent shall be the then
effective rate under the Lease and the pro-rata
share shall be appropriately adjusted. Tenant shall
receive an improvement allowance of $35.75/sf (up
to $6.00/sf may be applied to soft costs or rent as
described under Tenant Improvements on page 2).
LL may lease such space to another tenant for a
term ending on or prior to 9/l/98. LL shall not be
liable to Tenant in the event of tenant holding
over or other violation of the lease.
(T) Option to Expand: Provided Tenant is occupying 80% of Premises for
its own use, Tenant may expand into the additional
space as follows:
Expansion One:
--------------
Effective: 11/1/00
Notice: 11/l/99
Size: 5,000 sf on the 18th floor as highlighted on
Exhibit A-3 (see attached). LL may change the size
(not to decrease by more than 20% or increase) in a
manner reasonably satisfactory to Tenant upon
notice by 3/l/00
Rent: Same rate/sf as for existing Premises
Improvement Allowance: $25.00/sf with up to
$4.25/sf applied as outlined on page 2 of abstract
for unspent amounts.
Page 6
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Expansion Two:
--------------
Effective: 11/l/03
Notice: 11/l/02
Size: 5,000 sf on the 18th floor as highlighted on
Exhibit A-3 (see attached). LL may change the size
(not to decrease by more than 20% or increase more
than reduction in 1st Option space) in a manner
reasonably satisfactory to Tenant upon notice by
3/l/03.
Rent: Same rate/sf as for existing Premises
Improvement Allowance: $15.00/sf with up to
$2.55/sf applied as outlined on page 2 of abstract
for unspent amounts.
LL may defer or accelerate the Addition Date up to
6 months upon notice at least 8 months prior to the
earlier of the Accelerated Date or the stated
Addition Date. LL may lease such space to another
tenant for a term expiring on or before the
Addition Date. LL shall not be liable to Tenant in
the event of tenant holding over or other violation
of the lease.
Rent shall not commence on Expansion Space 1 or 2
until 8 weeks after the later of the Addition Date
and the date of possession is delivered to Tenant.
Skadden, Arps, Slate, Meagher & Flom (19th & 20th Floors) -cl2/5/88 - 4/30/2000)
- --------------------------------------------------------------------------------
(T) Option to Expand: Tenant had the option to expand into 3,037 sq. ft.
on 20th floor effective 1/1/91, and had a second
option to expand into the balance of the 20th floor
effective 5/l/95. If Tenant elected not to exercise
any expansion option, Tenants rights to such option
as well as any subsequent expansion options would
extinguish. Since Tenant did not exercise expansion
option for 3,037 sq. ft., they apparently no longer
have the option to expand into the balance of the
20th floor.
Federal Home Loan Mortzai!e Corporation (25th Floor) (2/l/86 - 4/30/99)
- -----------------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Premises: Not less
than 6,375. sq. ft. nor more than 8,625 sq. ft.
(exact number to be determined by LL) on 29th
floor, at a single location on such floor to be
designated by LL.
-Exercise Date: Notice to LL by 5/l/96 - Base Rent:
Same per sq. ft. as for existing premises -Tenant
Improvements: $17.50/sq. ft. - Pro-rata Share:
increased accordingly
If exercised, LL shall give notice to Tenant by
6/l/96 setting forth (i) exact location and number
of rentable sq. ft. within Expansion Space; and
(ii) effective date on which LL will deliver
possession of Expansion Space (between 11/l/96 -
11/l/97)
If LL is unable to deliver possession of Expansion
Space to Tenant on or prior to 60th day following
scheduled Effective Date, and if Tenant so elects,
LL shall use diligent efforts to make immediately
available to Tenant temporary space for occupancy
by Tenant until the 120th day following the
Page 7
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
date on which the Expansion Space is delivered to
Tenant. LL and Tenant shall execute a short term
lease to govern Tenant's occupancy of such
Temporary Space. No rent shall be paid by Tenant
for Temporary Space. However, Tenant shall pay its
pro-rata share of taxes and operating expenses on a
net basis.
If LL fails to deliver possession on or prior to
180th day following scheduled Effective Date,
Tenant may withdraw it's exercise of expansion
option by delivering written notice to LL on or
before I 10 th day following expiration of said 180
day period.
(T) Option To Expand: (Notification Date has elapsed) Provided Tenant
occupies the entire Premises as of the Addition
Date, Tenant may lease any space not leased on the
second floor as of the date of the Fifth Amendment.
Tenant shall give notice to LL by 1/31/96. Rent
shall be $14.30/sf plus a pro-rata share of
operating expenses and real estate taxes. Tenant
shall receive an improvement allowance equal to the
product of $15.00/sf multiplied by the number of
months remaining in the term divided by 51.
LL may lease the Second Floor Expansion space to
another tenant and LL shall not be held liable in
the event LL does not deliver possession due to a
holding over, provided LL uses diligent efforts to
obtain possession. If LL is unable to deliver
possession of Expansion Space to Tenant on or prior
to 60th day following scheduled Effective Date, and
if Tenant so elects, LL shall use diligent efforts
to make immediately available to Tenant temporary
space for occupancy by Tenant until the 120th day
following the date on which the Expansion Space is
delivered to Tenant. LL shall pay all reasonable
out-of-pocket costs incurred in connection with
Tenant's move to the Temporary space. LL and Tenant
shall execute a short term lease to govern Tenant's
occupancy of such Temporary Space. No rent shall be
paid by Tenant for Temporary Space. However, Tenant
shall pay its pro-rata share of taxes and operating
expenses on a net basis.
If LL fails to deliver possession on or prior to
180th day following scheduled Effective Date,
Tenant may withdraw it's exercise of expansion
option by delivering written notice to LL on or
before 10th day following expiration of said 180
day period.
Barack, Ferrazzano, Kirschbaum & Perlaman (27th and 28th Floors) (10/2/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Option to Expand: Tenant has five (5) expansion options, as follows:
Expansion Option #1: (Has Expired)
---------------------
-Premises: 5,043 sq. ft. on 28th floor ("First
Additional Space"), currently leased to Chilmark
Partners-Effective Date: 5/l/90, if FHLMC fails to
exercise its option to lease such space by 12/l/89.
Expansion Option #2: (Has Expired)
---------------------
-Premises: 4,000 sq. ft. ("Interim Additional
Space") at any location in building provided that
LL will use reasonable efforts to locate the
Interim Additional Space on a high-rise floor.
Page 8
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Effective Date: 5/l/90, if FHLMC exercises its
option by 12/l/89 to lease the First Additional
Space.
Expansion Option #3:(Exercised via 3rd Amendment)
-------------------
-Premises: 28th floor First Additional Space (5,043
sq. ft. - see Option # 1) - Effective Date: 9/l/95,
if FHLMC exercises its option to lease the First
Additional Space.
Expansion Option #4:
--------------------
- Premises: Between 2,900 - 4,800 sq. ft.
(determined by LL) on 28th floor, a portion of
which is currently occupied by John Nuveen & Co.
("Second Additional Space")-Effective Date: 9/l/95
Per Letter Agreement dated 6/22/94, Tenant waived
its right to exercise Expansion Option # 4.
Expansion Option #5:
--------------------
-Premises: Between 12,600 - 14,600 sq. ft.
(determined by LL) constituting the balance of the
28th floor ("Third
Additional Space") Effective Date: 3/l/2000
-Tenant Notification Date: 13 - 18 months prior to
respective Effective Date.
-No later than 18 months prior to Effective Date,
for 4th and 5th Expansion Options (3/l/94 and
9/l/98, respectively), LL shall notify Tenant of
exact location and rentable area of the additional
space. Such space shall be contiguous with the then
current premises.
- If Tenant does not exercise, Tenant shall have no
further rights with respect to such Expansion
Option, provided that Tenant shall not be deemed to
have waived any other Expansion Options.
-Base Rent for each Expansion Option shall be 100%
of market, subject to any flat rate, indexed or
other material escalations to which market rate
base rental is then subject. Such rent and
escalations shall be set forth in a certificate
delivered by LL to Tenant no later than 90 days
after LL receives Tenant's notice of its exercise
of the Expansion Option with respect to a
particular Additional Space. If LL and Tenant can
not agree on rental, Tenant may cancel its exercise
of the Expansion Option in notice to LL not later
than 30 days after Tenant's receipt of such
certificate.
LL may (i) defer the Effective Date for any
Additional Space by a period of not more than 18
months; or (ii) accelerate the Effective Date for
the Second Additional Space and Third Additional
Space by a period of not more than 9 months, upon
notice to Tenant specifying the new Effective Date
given no later than the later of (a) 3 months prior
to the latest date Tenant may give notice of
exercise of Expansion Option with respect to such
Additional Space (the "Final Notice Date"); and (b)
30 days after delivery of Tenant's notice of
exercise of the Expansion Option with respect to
such Additional Space, in which event Tenant may
withdraw such notice. of exercise on or before the
later of. five (5) days after the Effective Date
Notice is given or the Final Notice Date.
Page 9
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Subject to the rights of Tenant hereunder, LL
shall in any event have the right to lease the
Additional Space to another tenant and shall not be
liable to Tenant in the event that LL cannot
deliver possession of the Additional Space to
Tenant on account of a holding over by such other
tenant.
-If, due to the holding over of such other tenant,
LL is unable to deliver possession of Additional
Space within one (1) year after the Effective Date,
LL shall, by written notice to Tenant as soon as
practicable after expiration of such one year
period, either (i) offer Tenant a comparable amount
of space in the Building (to be identified in LL's
notice) for occupancy by Tenant beginning no later
than 30 days after the first anniversary of such
Effective Date until such Additional Space is
available (which temporary space shall be
constructed, at LL's sole cost, with reasonably
usable building standard improvements suitable for
law offices) at a base rent equal to 50% of base
rent otherwise payable under the terms of this
paragraph for the Additional Space LL is then
unable to deliver, provided that Tenant will be
obligated to pay full pass thrus of Operating
Expenses and Taxes, or (ii) offer Tenant the option
to terminate this lease. If Tenant fails to notify
LL within ten (10) days after LL's offer notice of
Tenant's election to accept the offer made, Tenant
shall be deemed to have rejected the offer and
waived any remedy for damages or termination by
reason of LL's failure to deliver the Premises,
provided that such waiver shall not relieve LL of
its obligation to use reasonable efforts to obtain
possession of such Additional Space.
-LL may increase the rentable area of the First
Additional Space by up to 5% or decrease the
rentable area by no more than 15%
-LL may increase the rentable area of the Second
Additional Space and the Interim Additional Space
by up to IO% or decrease the rentable area by no
more than 15% (i.e., Second Additional Space may be
decreased to 5,185 sq. ft or increased to 8,800 sq.
ft.)
-LL may increase the rentable area of the Third
Additional Space by up to 15% or decrease the
rentable area by no more than 20% (i.e., Third
Additional Space may be decreased to 10,080 sq. ft.
or increased to 16,790 sq. ft.)
-LL will notify Tenant of any change in rentable
area of any Additional Space no later than the
later of. (A) three (3) months prior to the Final
Notice Date and (B) thirty (30) days after the
delivery of Tenant's notice of exercise of the
Expansion Option with respect to such Additional
Space, in which event, Tenant may withdraw such
notice of exercise on or before the later of. five
(5) days after LL's notice of the change in the
rentable area of such Additional Space is given or
the Final Notice Date.
-T.I. For Each Additional Space: Space taken "as-
is", except for construction allowances or labor or
materials included at LL's expense being offered in
connection with prevailing market rate leases. If
Tenant employs LL's general contractor to perform
construction or remodeling work in any Additional
Space, LL to limit fee for overhead, administration
and supervision (which fee is in addition to any
general contractor's fee) to 8% of the cost of such
improvements.
Page 10
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- As Additional Space is delivered to Tenant, such
space shall become part of the Premises and
Tenant's pro-rata percentage and Additional Rent
payments shall change accordingly.
Bain & Company, Inc. (30th Floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant shall have
the right to expand into 3,000 rsf on the 30th
floor (Expansion Space #1) on 10/14/97 upon notice
to LL by 1/14/97 (see attached for floor plan of
Expansion Space). Tenants rights with respect to
the additional space are subject to the following
provisions:
Base Rent: Same rate per sf as in effect for the
initial premises. Tenant's proportionate share
shall be appropriately adjusted.
LL's Rights: LL may, upon notice to Tenant before
the Notice Date, accelerate or defer Addition Date
by not more than 3 months or change the size of the
Additional Space by not more than 20%. LL shall
have the right to lease Additional Space to another
tenant for a term not beyond the applicable
Addition Date and shall not be liable to Tenant in
the event that LL cannot deliver possession due to
holdover by such other tenant. If LL cannot deliver
possession within 6 months of the Addition Date,
Tenant shall have the right to cancel its election
to lease such Additional Space.
Tenant Improvements Additional Space #1: $42.25/sf
Page 11
<PAGE>
333 West Wacker Drive
Summary of Rights of First Offer/Refusal
As of: August 15, 1997
Sheldon F. Good Realty, Inc. (4th Floor) (2/l/87 (M-T-M)
- ---------------------------------------------------------
(T) Right of Second
Offer: Subject to the rights of Wood, Lucksinger and
Epstein, if LL intends to lease any space on the
4th floor which is contiguous to the premises
("Option Space") during the initial or renewal
term, LL shall offer such space to Tenant in
writing. Such offer shall specify Base Rent at
which LL would be willing to lease such space to
Tenant. Tenant must accept within 10 days business
days. If Tenant does not accept, LL shall be free
to lease such space to another party on whatever
terms and conditions it considers appropriate.
Correspondence in File:
-----------------------
Letter from JMB dated 5/23/90, notifying Tenant of
LL intention to lease a portion of the 4thfloor,
containing 1,876 sq. fl. Base Rent of
$22.50/sq..ft., on month-to-month basis, with 60
day termination notice. No response from Tenant
found in file.
Sanchez and Daniels (Suite 500) (3/l/92 - 2/28/02)
- --------------------------------------------------
(T) Right of First
Refusal: Premises: Any space on 5th floor ("Option Space")
If during initial term LL receives a letter of
intent from 3rd party to lease Option Space and
provided LL would be willing to lease such space
upon terms set forth in letter of intent, LL shall
deliver a statement as to the material terms of
such letter of intent to Tenant, and Tenant shall
have seven (7) business days therefrom to elect to
lease such Option Space at same Base Rent and upon
same terms as contained in letter of intent.
If Tenant does not exercise, LL shall be free to
lease such Option Space to 3rd party on
substantially the same terms as are set forth in
letter of intent.
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- -------------------------------------------------------------- --------
(T) Right of First
Refusal: Premises: 6th floor space contiguous to premises
("Offer Space")
- If during initial term LL receives a letter of
intent from any 3rd party to lease the Offer Space
and provided LL would be willing to lease such
space on terms set forth in the letter of intent,
LL shall deliver a copy of letter of intent to
Tenant, and Tenant shall have 5 business days to
elect, via written notice to LL, to lease said
Offer Space at the same Base Rent and upon same
terms and conditions contained in letter of intent.
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- If Tenant does not exercise, Tenant shall be
deemed to have waived its rights hereunder, and LL
shall be free to lease such space to such 3rd party
or any other party on substantially the same terms
as are set forth in letter of intent.
Cassiday, Schade & Gloor (11th and 12th Floors - 34,659 sq. ft.) (3/l/83 -
- --------------------------------------------------------------------------
2/28/98
- -------
(T) Right of First
Offer: Premises: (i) and space on 1Oth floor; and (ii)
10,996 sq. ft. on 2nd floor per Exhibit B (see
attached). Such premises are collectively called
"Option Space".
Prior to leasing any Option Space to any other
tenant (other than tenants currently having any
rights with respect to such space), LL shall offer
such Option Space to Tenant, such offer to be made
in written notice specifying Base Rent (current
market rent) and the date on which such Option
Space would be made available to Tenant. Tenant
must exercise within 5 days at Base Rent specified
in LL notice. Space to be taken "as is", with no
tenant improvement allowance.
If not exercised, LL shall be free to lease such
Option Space to any other party on whatever terms
and conditions it deems appropriate.
Carnow, Conibear & Associates, Ltd. (14th Floor) (9/15/85 - 12/31/03)
- ---------------------------------------------------------------------
(T) Right of First
Refusal: In the event LL receives an executed letter of
intent or other memorandum of agreement from a
prospective tenant for any available space on the
14th floor, LL shall deliver notice of such
prospective lease to Tenant offering Refusal Space
to Tenant upon same terms and conditions as
contained in such letter of intent. Tenant shall
have 10 business days to lease such Refusal Space.
If Tenant fails to respond within 10 business days,
Tenant shall be deemed to have waived its rights
and LL shall be, subject to Tenant's expansion
options, free to lease such Refusal Space.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- -------------------------------------------------------------
(1) Right of First
Refusal: Premises: 1,780 sq. ft. on 17th floor as
highlighted on Exhibit "A" to lease (see attached)
("Option Space")
If at any time during Initial Term of lease, LL
shall receive an executed letter of intent from any
3rd party containing specific terms to lease the
Option Space, and provided LL would be willing to
lease such space upon the terms set forth in letter
of intent, LL shall deliver written notice of such
letter of intent to Tenant, and Tenant shall have
10 business days to elect to lease such Option
Space at the Base Rent set forth below and at the
terms and conditions herein contained.
If Tenant exercises, LL shall deliver possession to
Tenant on 60th day following LL's receipt of
Tenant's notice electing to lease such Option Space
(the "Addition Date").
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If Tenant does not exercise, LL shall be free to
lease such Option Space to such 3rd party or any
other party. If LL and such third party thereafter
shall fail to enter a lease within 180 days or if
LL thereafter elects to lease Option Space to 3rd
party on terms that are materially different from
those contained in letter of intent, LL shall first
offer Option Space to Tenant pursuant to any such
new terms and Tenant shall again have the right to
lease such Option Space, upon IO business days
notice to LL. Base Rent for Option Space is
dependent upon the timing of the Addition Date and
is to be calculated as follows:
Addition Date Between Rent/SF Total Rent Term
--------------------- ------- ---------- ------------------------
5/15/94 - 5/14/96 $1.00 $1,780.00 thru end of initial term
5/15/96 - 5/14/97 $2.00 $3,560.00 thru end of initial term
5/15/97 - 5/14/98 $3.00 $5,340.00 thru end of initial term
5/15/98 - 5/14/99 $4.00 $7,120.00 thru end of initial term
Pro-rata share shall increase accordingly. Base
Rent for the Option Space shall be abated from
9/10/93 - 9/9/94, and space shall be taken "as is".
Katz Randall & Weinbery- (1700 & 1800) (11/l/95 - 4/30/08)
- ----------------------------------------------------------
(T) Right of First
Offer: Provided Tenant is not in default and occupies at
least 80% of Premises for its own use and subject
to the rights of Facility Capital Corporation on
1,780 sf on the 17th floor, Tenant shall have a
ROFO on all space that becomes available on the
17th and 18th floor. Prior to LL leasing any such
space, LL shall notify Tenant of the terms LL is
offering. Tenant shall have 14 business days to
accept under the terms outlined in the offer. If
Tenant does not accept or does not execute an
amendment within 20 days adding such space, LL is
then free to lease such space to third parties;
however, if terms are less favorable to LL by more
than 10%, Tenant must be offered those terms.
Tenant shall have 5 business days to accept such
revised terms.
Per Agreement dated 11/10/95, Tenant has waived its
ROFO as it relates to the lease with Rose &
Associates Office Group. In exchange for this
waiver, Rose agrees that, upon not less than 6
months notice from Tenant, Rose shall vacate its
premises and assign the Rose lease to Tenant. The
effective date of such assignment shall not be
prior to 11/ 1/97, and LL's consent shall be
required.
Barack, Ferrazzano, Kirschbaum & Perlaman (27th and 28th Floors) (10/2/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Right of First
Offer: If LL intends to lease any part of 28th floor (the
"Offering Space") to any other tenant, LL must
offer space to Tenant via written notice
specifying:
- base rent, escalation charges and other material
items, including concessions at which LL would be
willing to lease such space to prospective tenants;
and
-the date which such Offering Space will be made
available to Tenant.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Tenant shall have 10 business days to accept
space, at noted terms, by notice to LL in writing.
If Tenant accepts, such space becomes part of the
premises and is subject to paragraph 37 (Personal
Liability of Tenants Partners).
- If Tenant does not accept, LL shall be free to
lease Offering Space to any other party on
substantially same terms offered to Tenant provided
that if LL does not certify to Tenant that Offering
Space has been leased to a third party within 180
days, LL shall again be obligated to offer such
Offering Space to Tenant. Tenants waiver of rights
to Offering Space shall not affect Tenant's
Expansion Options.
Tenant's rights to leasing the Offering Space
subject to the following:
(i) Offering Space will be accepted by Tenant "as
is", except for allowances noted in LL notice; &
(ii) During the twelve (12) months after any
Expansion Option (See Tenants Right to Expand
comments above) has been waived, canceled or
expired with respect to such Offering Space, Tenant
shall not have any rights of first offer with
respect to such Offering Space unless such space is
being offered to a third party at terms more
favorable then available to Tenant under Tenant's
Expansion Options.
Ameritech Health Connections, Inc. (29th Floor) (6/l/93 - 5/31/00)
- -------------------------------------------------------------------
(T) Right of First
Refusal: Subject to the prior rights of the Federal Home
Loan Mortgage Company with regards to the space on
the 29th floor.
If LL enters into a letter of intent for space on
the 29th floor, LL shall notify Tenant of such
"Option Space" and all of the basic business terms
in said letter of intent. Tenant has 10 business
days to accept on such terms.
If Tenant does not exercise, or if LL and Tenant do
not enter into an amendment for such Option Space
within 14 days after Tenant exercises, LL may lease
said Option Space to any other party, free of
Tenant's rights hereunder.
Bain & Company, Inc. (30th Floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Right of First
Offer: If at any time prior to the 84th month during the
term, LL decides to lease the Additional Space with
respect to space for which Tenant has not yet
exercised its Expansion Option, LL shall notify
Tenant. Tenant shall have 15 days to notify LL that
it will lease the entire Additional Space set forth
in LL's notice. Tenant improvements shall be at the
rates set forth in Schedule 2 (see attached) for
Additional Space leased prior to the 60th month of
the term, and thereafter at the rate set forth in
LL's notice. If Tenant does not exercise, Tenant
shall have no further rights and LL shall be free
to lease such space provided that if LL does not
enter into a lease for such Additional Space within
I year after Tenant's rejection or if such lease
terminates before the 84th month of the Term, such
Additional Space will again be subject to the first
offer rights.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
John Nuveen & Co., Incorporated (30th Floor) (TBD - 2/29/00)
- ------------------------------------------------------------
(T) Right of First
Offer: At any time prior to 3/1 /00, if LL commences
negotiations with a third party for leasing of any
portion of the 30th floor (other than space subject
to the rights of Bain & Company, Inc.) LL must
notify Tenant of location, size, Base Rent and
commencement date (not to be earlier than 30 days
after notice). Tenant shall have 10 days to accept
space. If Tenant does not accept, LL may rent such
space to the third party. If LL does not rent this
space to such third party or such third party term
ends, the space shall again become subject to
Tenant's ROFO. Base Rent shall be the then current
market rental.
Page 5
<PAGE>
333 West Wacker Drive
Summary of Options to Renew
As of: August 15, 1997
MCI Metro Access Transmission Services, Inc. (8/l/95 - 7/31/99)
- ---------------------------------------------------------------
(T) Option to Renew: Automatic renewal for two 4-year terms (8/l/99 -
7/31/03 & 8/l/03 7/31/07) with rent at the Fair
Telecommunications Market Rate.
Pepi Corporation d/b/a Alonti (Lobby) (11/15/95 - 11/30/05)
- -----------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (12/l/05 -11/30/10),
upon notice to LL by 1 1/3 0/04. Rent shall be
100% of market, but not less than the aggregate
Rent payable by Tenant for the last lease year of
the initial term.
Smith Mitchell Investment Group, Inc. (2nd Floor) (7/l/94 - 6/30/99)
- --------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew, upon notice to LL between
I/l/98 - 8/31/98.
Rent shall be 100% of market. Tenant shall have right
to nullify its exercise of option by notice to LL
within 10 business days of LL's market rent notice to
Tenant (which LL's notice shall be given after
Tenants exercise of option but not later than 6
months prior to commencement of renewal period).
Sanchez and Daniels (Suite 500) (3/l/92 - 2/28/02)
- --------------------------------------------------
(T) Option to Renew: One 5-year option to renew (3/l/2002 - 2/28/2007),
with notice to LL not earlier than 15 months
(12/l/2000) or later than 12 months (3/l/2001). Base
Rent shall equal greater of (i) 95% of market; and
(ii) annual Base Rent payable by Tenant during the
last year of the Initial Term.
Tenant's notice that they wish to renew shall also
contain Tenant's determination of fair market rental
for such renewal period. Within 30 days after receipt
of Tenant notice, LL shall notify Tenant that it
either accepts Tenant's estimate of Fair Market Rent
or deliver LL's determination of Fair Market Rent. If
LL's estimate is not more than 110% of Tenant's
estimate, Fair Market Rent shall be the average of
the two estimates. If the difference is greater than
110%, LL and Tenant will commence negotiations to
determine Fair Market Rent. If no agreement is
reached within 30 days of LL's estimate notice,
Tenant may elect, by delivery of notice to LL within
said 30 day period, either to (i) withdraw its
exercise of renewal option; or
(ii) have Fair Market Rent determined via appraisal.
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- ------------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (9/l/1998 - 8/31/2003,
assuming9/l/93 lease commencement date), with notice
to LL by 12/l/1997. Rent shall equal 100% of market.
LL to notify Tenant of Base Rent during renewal term
by 1/l/98. Tenant shall have right to nullify its
exercise of option by notice to LL within 30 days of
LL's notice to Tenant of rental terms.
Arbor Office Suites - 333 L.P. (7th Floor) (4/l/85 - 3/31/02)
- -------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (4/l/2002 - 3/31/2007),
with 15 months notice to LL (1/l/2001). Base Rent to
equal 100% of market. LL to deliver certificate
identifying Base Rent (including escalation) during
renewal term, at least 10 months prior to commencement
of renewal term (6/l/200 1).
Nyhan, Pfister, Bambrick & Kinzie, P.C. (8th Floor) (2/l/92 - 1/31/02)
- ----------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (2/l/2002 - 1/31/2007 and
2/l/2007 1/31/2012), with 12 months notice to LL
(2/l/2001 and 2/l/2006, respectively). LL to deliver
certificate specifying Base Rent at lease 7 months
prior to commencement of renewal term (7/l/2001 and
7/l/2006, respectively).
Base Rent shall be 90% of market for each renewal
term. In no event shall Base Rent for applicable
renewal term be less than Base Rent in effect during
last year of initial term or First Renewal Term, as
applicable.
If Tenant objects to Base Rent and LL and Tenant
cannot agree on same, Tenant may cancel its election
to renew in notice to LL given within 30 days of LL's
notice specifying Base Rent.
Carnow, Conibear & Associates, Ltd. (14th Floor) (9/15/85 - 12/31/03)
- ---------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (1/l/04 - 12/31/08 and
I/l/09 - 12/31/13) upon notice to LL between 1/l/02 -
12/31/02 and 1/l/07 - 12/31/07, respectively. The Base
Rent shall be 95 % of the Fair Market Rental. Each
renewal notice shall contain Tenant's determination of
the Fair Market Rental. The Base Rent shall be 95 % of
the Fair Market Rental. LL shall have 30 days to
accept Tenant's determination of Fair Market Rental
Rate or deliver LL's determination of the Fair Market
Rental Rate. If LL's estimate exceeds Tenant's, Tenant
and LL shall negotiate the Fair Market Rental. If an
agreement cannot be reached within 60 days from date
of LL's estimate the rate shall be determined per the
appraisal process described in the 1st Amendment.
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Tetra Pak, Inc. (15th & 16th Floors) (9/l/91 - 8/31/01)
- -------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (9/l/2001 - 8/31/2006),
with 14 months notice to LL (7/l/2000). Base Rent
shall equal 100% of Market. LL to deliver certificate
specifying Base Rent during renewal term, at least 12
months prior to commencement of renewal term
(9/l/2000).
If Tenant objects to Base Rent specified by LL, Tenant
may cancel its election to renew via notice to LL
within 30 days of LL's notice to Tenant specifying
such Base Rent.
Grosvenor Capital Management, L.P. (16th Floor) (3/l/93 - 5/31/99)
- ------------------------------------------------------------------
(T) Option to Renew: Two 3-year options to renew (6/l/1999 - 5/31/2002 and
6/l/2002 5/31/2005), with 12 months notice to LL
(6/l/1998 and 6/l/2001, respectively). LL to deliver
certificate specifying Base Rent and escalations
(equal to 100% of market for each renewal term) not
later than 9 months prior to end of then current term.
If Tenant objects with LL's determination of rent, and
LL and Tenant cannot agree on rental rate, Tenant
shall have the right to (i) cancel its exercise; or
(ii) elect to have rent determined by appraisal, in
written notice to LL not later than 30 days after
delivery of LL's notice specifying such rent.
Hefter & Radke (Suite 1650) (4/15/89 - 2/28/01)
- -----------------------------------------------
(T) Option to Renew: One 5-year option to renew (3/l/01 -2/28/06) upon
notice to LL between 9/l/99 - 5/31/00. Base Rent shall
be 100% of Fair Market Rental. Tenant's renewal notice
shall contain Tenant's determination of Fair Market
Rental. Within 30 days after receipt of Tenant's
renewal notice, LL by notice to Tenant shall either
accept Tenant's estimate of Fair Market Rental or
deliver LL's determination of Fair Market Rental. If
LL's estimate exceeds Tenants, LL and Tenant will
commence negotiations to determine Fair Market Rent.
If not agreed upon within 30 days after delivery of
LL's notice, the Fair Market Rent, if Tenant elects by
delivering notice of such election within 5 days
following the negotiation period, shall be determined
by appraisal.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- ------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/15/99 - 5/14/04), with
notice to LL by 9/l/1998 (such notice shall also
contain Tenant's estimate of fair market rent). LL
shall notify Tenant by 9/21/98 that LL either (i)
accepts Tenant's rent estimate or (ii) deliver LL's
Fair Market Rent estimate. Rent shall equal 100% of
market.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If LL's estimate exceeds Tenant's estimate, LL and
Tenant will commence negotiations for fair market
rent. If no agreement has been reached within 30 days
after delivery of LL's estimate, the fair market rent,
if Tenant elects by notice to LL within 5 days (after
30 day period), shall be determined by appraisal.
Katz Randall & Weinberg (1700 & 1800) (11/l/95 4/30/08)
- -------------------------------------------------------
(T) Option to Renew: Provided Tenant occupies at least 80% of the rsf for
its own use, Tenant may renew for one 5- year period
(5/l/08 - 4/30/13) upon notice to LL by 4/30/07. Rent
shall be the greater of (i) Base Rent payable in the
last year of original term (ii) or 95% of Market. LL
shall deliver notice of market within 45 days of
Tenant's notice, not to be later than 6/30/07.
Skadden, Arps, Slate, Meazher & Flom (19th & 20th Floors) (12/5/88 - 4/30/2000)
- -------------------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/l/2000 - 4/30/2005),
with 18 months notice to LL (10/31/98). LL to deliver
certificate specifying Base Rent (equal to 100% of
market) within 60 days after receipt from Tenant of
its election to renew. Upon receipt of fair market
rent notice from LL, Tenant shall have (i) 90 days to
withdraw exercise of option; or (ii) 10 business days
to state what Tenant believes fair market rent should
be and request binding arbitration of fair market
rent.
Must be renewed in conjunction with renewal of all
spaces covered by Additional Leases (defined as
Sublease dated 5/l/85, as amended by First Amendment
of Sublease dated 6/30/88). Upon renewal, all
Additional Lease space shall be deemed part of the
premises hereunder.
National Equity Advisors, Inc. (Suite 2070) (1/l/95 - 12/31/99)
- ---------------------------------------------------------------
(T) Option to Renew: One 5-year period (1/l/00 - 12/31/04) upon notice to
LL 14 months prior to expiration (10/31/98). Base rent
shall be equal to the then current market rent as set
forth in LL's notice delivered to Tenant at least 13
months prior to expiration (9/30/98). In the event
Tenant objects to the Base rent and LL and Tenant
cannot agree on the Base Rent, Tenant may (i) cancel
its election to extend the term (ii) accept LL's
determination of Base Rent or (iii) submit Base rent
to arbitration. Tenant shall respond within 30 days of
LL's notice, or be deemed to have accepted LL's
determination.
Federal Home Loan Mortgage Corporation (25th Floor) (2/l/86 - 4/30/99)
- ----------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/l/1999 - 4/30/2004),
with no earlier than 24 months notice (5/l/1997) and
no later than 12 months notice (5/l/98) to LL. Base
Rent shall be 100% of market. LL to deliver
certificate specifying Base Rent during renewal term
within 30 days of Tenant's notice.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If LL and Tenant cannot agree on Base Rent within 30
days after LL's notice specifying such Base Rent,
Tenant shall have right, within 30 days after
expiration of said 30 day period, either (i) to
withdraw its exercise of renewal option; or (ii)
require fair market rent to be determined by
appraisal.
Tenant may not exercise the renewal option in regard
to the 5th Amendment Expansion Space only. However,
Tenant may elect to exercise the renewal option to the
25th floor solely or in conjunction with the 5th
Amendment Expansion Space.
Barack, Ferrazzano, Kirschbaum & Perlaman (27th and 28th Floors) (10/2/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Option to Renew: One 5-year option to renew (7/l/2003 - 6/30/2008),
with notice to LL by 12/31/2001. Base Rent shall be
100% of market including rental escalations. LL to
deliver certificate identifying Base Rent and any flat
rate or indexed escalation for the renewal term to
Tenant on or before 5/31/2002.
If Tenant objects to such rent, it may cancel its
option to renew via notice to LL by 6/30/2002.
Notwithstanding the foregoing, Base Rent due with
respect to the 27th floor only, for the first 3 months
of the extended term, shall be equal to the same rate
as the Base Rent with respect to the 27th floor during
the last month of the original term of lease.
Association of American Railroads (29th Floor) (1/25/88 - 10/31/97)
- -------------------------------------------------------------------
(T) Option to Renew: (Notification Date has elapsed) Subject to the rights
of John Nuveen & Co. and Ameritech Health Connections.
One 1 -year option to renew (1 1/l/97 - 10/31/98) at
market rent. Tenant shall notify LL between 10/l/96
and 1/31/97 of intent to renew. LL shall notify Tenant
by 5/l/97 the Base Rent during the Renewal Period.
Tenant shall have ten (10) days thereafter to nullify
its exercise.
Ameritech Health Connections, Inc. (29th Floor) (6/l/93 - 5/31/00)
- ------------------------------------------------------------------
(T) Option to Renew: Two 3-year options to renew (6/l/2000 - 5/31/2003 and
6/l/2003- 5/31/2006, assuming a 6/l/93 start date),
with 9 months notice to LL (9/l/1999 and 9/l/2002,
respectively). Base Rent shall be 100% of market,
including any increases thereto, whether by CPI or
other methods. LL to deliver certificate indicating
market terms within 45 days after receipt of Tenant
notice. If LL and Tenant can not agree on terms,
Tenant may cancel renewal election by notice to LL
within 30 days of receipt of terms from LL.
Page 5
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Bain & Company, Inc. (30th Floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (I 1/14/05 - 11/13/10),
upon 14 months notice to LL (i.e.,by 9/13/03)
Base Rent shall be equal to 100% of market. LL shall
notify Tenant of Base Rent at least 12 months prior to
commencement of renewal term. Within 30 days, Tenant
may accept rent, cancel option to renew, or submit
Base Rent to arbitration.
Subject to the rights of John Nuveen Co., Inc. with
respect to the Premises (LL shall notify Tenant by
10/l/04 if Nuveen exercises its rights with respect to
Premises). Expansion rights are not applicable during
renewal term.
John Nuveen & Co., Incorporated (30th Floor) (TBD - 2/29/00)
- ------------------------------------------------------------
(T) Option to Renew: The Renewal Option for Tenant's space on Floors 31 -36
shall not apply to the 30th floor space.
If Tenant exercises its first renewal option for
floors 31- 36, Tenant shall have the right to lease
the balance of the 30th floor other than the Bain
Space and the 30th floor Additional Space. Tenant
shall exercise such right at same time it exercises
its first renewal option (i.e., by 11/30/98). If
exercised, commencing 3/l/00, such expansion space
shall become part of the Premises in the same terms as
determined pursuant to the First Renewal Option.
John Nuveen & Co., Incorporated (Floors 31 - 36) (3/l/85 - 2/29/2000)
- ---------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (3/l/2000 - 2/28/2005 &
3/l/2005 2/28/2010), with 15 months notice to LL
(11/30/98 and 11/30/2003, respectively). Base Rent
shall be 100% of market as of the commencement of each
renewal term. LL to deliver certificate specifying
Base Rent at least one-year prior to the commencement
of each renewal term (3/l/99 and 3/l/2004,
respectively). If LL and Tenant can not agree on
terms, Tenant may cancel renewal election by notice to
LL within 30 days of receipt of notice from LL
specifying Base Rent.
Page 6
<PAGE>
97634830
AUG 2 8 1997
PREPARED BY AND WHEN
RECORDED RETURN TO:
Caryn L. Chalmers, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Prudential Loan No. 6-101-882
ASSIGNMENT OF LEASES AND RENTS
------------------------------
THIS ASSIGNMENT is made as of this 27th day of August, 1997, by and from
----- ------
OVERSEAS PARTNERS (333), INC., an Illinois corporation "Assignor"), to and for
the benefit of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
("Assignee").
RECITALS:
---------
A. Assignor is the owner of certain real property located in Cook County,
State of Illinois more particularly described in Exhibit A attached hereto
("Property").
B. Assignor has executed and delivered to Assignee a promissory note
("Note") of even date herewith in the original principal amount of SIXTY-FIVE
MILLION DOLLARS ($65,000,000.00) and Assignor has executed and delivered to
Assignee a Mortgage, Security Agreement and Fixture Filing ("Mortgage") of even
date herewith and recorded contemporaneously herewith, securing, among other
things, the obligations of Assignor under the Note and the Mortgage
("Obligations").
C. Assignor desires to transfer and assign -to Assignee, absolutely and
unconditionally, all of its right, title and interest in, to and under the
leases described in Exhibit B attached hereto and by this reference incorporated
-------
herein, and any and all other leases, subleases, lettings and licenses of or
affecting the Property that may hereafter be entered into and all amendments,
extensions, modifications, replacements or renewals thereof (collectively,
"Leases"), and (a) the rents, income and profits due, or to become due
thereunder, and (b) the right to enforce, whether at law or in equity or by any
other means, all provisions thereof, and all claims of any kind that Assignor
may have against lessees under the Leases or any subtenants or occupants of the
Property (collectively, "Lessees") including, without limitation, any guarantees
of the obligations owed Assignor thereunder (the items described in clauses (a)
and (b) being hereinafter collectively called "Rents"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Mortgage.
<PAGE>
AGREEMENT:
----------
NOW, THEREFORE, as an inducement for the making of the loan evidenced by
the Note and secured by the Mortgage, Assignor hereby represents, covenants and
agrees as follows:
1. Assignment. Assignor hereby absolutely and unconditionally transfers,
----------
sets over and assigns to Assignee all right, title and interest of Assignor in,
to and under (a) the Leases and (b) the Rents. This Assignment is intended to
be and is an absolute present assignment from Assignor to Assignee and not the
mere passage of a security interest or a provision of additional security;
provided, however, that Assignor shall have a license to collect, except as
hereinafter provided, the Rents accruing by virtue of the Leases as they
respectively become due ("License"), but not in advance, and to enforce the
agreements of the Leases. Such License may be revoked, at Assignee's option, in
the event there occurs an Event of Default or breach by Assignor under any of
the terms, covenants or provisions of the Obligations, the Note, the Mortgage,
this Assignment or any other Loan Documents (as defined in the Mortgage).
Assignor covenants and agrees, however, that in exercising its License it shall
hold any and all such Rents in trust for the benefit of Assignee and shall apply
the same in payment of its Obligations, and in accordance with the Loan
Documents.
2. Assignee as Creditor of Lessee. Assignee, and not Assignor, shall be
------------------------------
the creditor of the Lessees in respect of assignments for the benefit of
creditors and bankruptcy, reorganization, insolvency, dissolution or
receivership proceedings affecting any such Lessee. Assignee, however, shall
not be the party obligated to make timely filings of claims in such proceedings
or to otherwise pursue creditor's rights therein. Assignee shall have the
option to apply any monies received by it as such creditor to the reduction of
the principal of or the premium, if any, or interest on the Obligations.
3. Default Remedies of Assignee. Upon an Event of Default and until such
-----------------------------
Event of Default shall have been fully cured, Assignor's License to collect
Rents shall immediately cease and terminate. Assignee shall thereupon be
authorized at its option to enter and take possession of all or part of the
leased premises, and to perform all acts necessary for the operation and
maintenance of such premises in the same manner and to the same extent that
Assignor might reasonably so act. In furtherance thereof, Assignee shall be
authorized, but under no obligation, to collect the Rents arising from the
Leases, and to enforce performance of any other terms of the Leases including,
but not limited to, Assignor's rights to fix or modify rents, sue for possession
of the leased premises, relet all or part of the leased premises, and collect
all Rents under such new Leases. Assignor shall also pay to Assignee, promptly
upon any such default: (a) to the extent permitted by law, all rent prepayments
and security or other deposits paid to Assignor pursuant to any Lease assigned
hereunder; and (b) all charges for services or facilities or for escalation
which have theretofore been paid pursuant to any such Lease to the extent
allocable to any period from and after such default. Assignee after payment of
all proper costs, charges and any damages including, without limitation, those
payable pursuant to Paragraph 7 hereof, apply the net amount of such Rents to
---------
the sums then due to Assignee under the Obligations to the extent permitted by
law. Assignee shall have sole
2
<PAGE>
discretion as to the manner in which such Rents are to be applied, the
reasonableness of the costs to which they are applied, and the items that will
be credited thereby.
4. Termination of Assignment. When Assignor pays Assignee for the full
-------------------------
amount of the indebtedness secured by the Mortgage and this Assignment, and such
payment is evidenced by a recorded satisfaction or release of the Mortgage, this
Assignment shall terminate and become void.
5. Notice to Lessee of Assignor's Default. Assignor hereby irrevocably
--------------------------------------
authorizes each Lessee, upon demand and notice from Assignee of Assignor's Event
of Default under the Obligations, the Mortgage, this Assignment or other Loan
Documents, to pay all Rents under the Leases to Assignee. Assignor agrees that
each Lessee shall have the right to rely upon any such notices of Assignee that
Lessee shall pay all Rents to Assignee, without any obligation to inquire as to
the actual existence of the default, notwithstanding any notice from or claim of
Assignor to the contrary. Assignor shall have no claim against any Lessee for
any Rents paid by Lessee to Assignee. Upon Assignor's cure of all Events of
Default, the Mortgage, this Assignment or other Loan Documents, Assignee may
give each Lessee written notice of such cure and, thereafter, until further
notice from Assignee, the Lessee shall pay the Rents to Assignor.
6. Assignment of Defaulting Assignor's Interest in Lease. If Assignor
------------------------------------------------
has defaulted under the Obligations, the Mortgage, this Assignment or other Loan
Documents, Assignee shall then have the right to assign Assignor's right, title
and interest in and to the Leases to any person acquiring title to the Property
through foreclosure or otherwise. Such assignee shall not be liable to account
to Assignor for the Rents thereafter accruing.
7. Indemnification of Assignee. Assignor hereby agrees to indemnify,
---------------------------
defend, protect and hold Assignee harmless from and against any and all
liability, loss, cost, expense or damage (including reasonable attorneys' fees)
that Assignee may or might incur under the Leases or by reason of this
Assignment other than liability, loss, cost, expense, or damage incurred as a
result of Assignee's gross negligence or willful misconduct. Such
indemnification shall also cover any and all claims and demands that may be
asserted against Assignee under the Leases or this Assignment. Nothing in this
paragraph shall be construed to bind Assignee to the performance of any Lease
provisions, or to otherwise impose any liability upon Assignee, including,
without limitation, any liability under covenants of quiet enjoyment in the
Leases in the event that any Lessee shall have been joined as party defendant in
any action to foreclose the Mortgage and shall have been barred thereby of all
right, title, interest, and equity of redemption in the Property. This
Assignment imposes no liability upon Assignee for the operation and maintenance
of the Property or for carrying out the terms of any Lease before Assignee has
entered and taken possession of the Property. Any loss or liability incurred by
Assignee, by reason of actual entry and taking possession under any Lease or
this Assignment or in the defense of any claims shall, at Assignee's request, be
reimbursed by Assignor. Such reimbursement shall include interest at the
Default Rate provided in the Note, costs, expenses and reasonable attorneys'
fees. Assignee may, upon entry and taking of possession, collect the Rents and
apply them to reimbursement for any such loss or liability. The provisions of
this
3
<PAGE>
Paragraph 7 shall survive repayment of the Obligations and any termination,
-----------
satisfaction or foreclosure of this Assignment.
8. Assignor's Possession After Default. If Assignor is in possession of
------------------------------------
any portion of the Property not leased to third party Tenants and is not
required to surrender such possession hereunder upon an Event of Default,
Assignor shall pay monthly in advance to Assignee, on Assignee's entry into
possession pursuant to Paragraph 3 hereof, or to any receiver appointed to
---------
collect the Rents, the fair and reasonable value for the use and occupancy of
the Property or such part thereof as may be in the possession of Assignor. Upon
default in any such payment, Assignor shall forthwith vacate and surrender such
possession to Assignee or such receiver and, in default thereof, Assignor may be
evicted by summary or any other available proceedings or actions.
9. Representations and Warranties. Assignor hereby represents and
------------------------------
warrants to Assignee that: (a) Assignor is the absolute owner of the Leases,
with absolute right and title to assign the Leases and the Rents; and (b) the
Leases are valid and in full force and effect and have not been modified,
amended or terminated, or any of the terms and conditions thereof waived, except
as stated herein.
10. Lease Terminations and Modifications. Assignor may do the following
------------------------------------
with respect to Leases (a) Assignor may terminate any Lease (other than the
Lease of a Major Tenant or tenant leasing more than 24,000 square feet) which is
------
in default; (b) Assignor may amend any Lease (other than the Lease of a Major
Tenant or tenant leasing more than 24,000 square feet) provided the amendment
------
does not (i) increase the obligations of the landlord, (ii) decrease or
accelerate the rent, or (iii) decrease the term; and (c) Assignor may enter into
new Leases (or renew existing Leases) for premises of 24,000 square feet or less
------
provided each Lease satisfies the minimum leasing requirements as set forth in
the Mortgage and is on Assignor's standard form lease (approved by Assignee)
with no modifications that increase the obligations of the landlord. Except as
expressly provided in this Section 10 (or after obtaining Assignee's prior
written consent), Assignor shall not (i) amend or modify any Lease, (ii) extend
or renew (except in accordance with the existing Lease provisions, if any) any
Lease (iii) terminate or accept the surrender of any Lease except in accordance
with the terms of any Lease approved or deemed approved by Lender, (iv) enter
into any new Lease of the Property, or (v) accept any prepayment of rent,
termination fee, or any similar payment. Any attempt at cancellation,
surrender, termination, change, alteration, modification, assignment, pledge or
subordination of any Lease, other than as set forth herein, without the prior
written consent of Assignee, shall be null and void.
11. Further Assurances. Assignor shall execute and deliver to Assignee,
------------------
and hereby irrevocably appoints Assignee, its successors and assigns as its
attorney-in-fact to execute and deliver during the term of this Assignment, all
further instruments as Assignee may deem necessary to make this Assignment and
any further assignment effective. Assignor shall, upon demand, pay to Assignee,
or reimburse Assignee for the payment of, any and all costs and expenses
(including reasonable attorneys' fees) incurred in connection with the
preparation and recording of such instruments.
4
<PAGE>
12. Transfer of Title to Lessee; Cancellation of Lease. Each Lease shall
--------------------------------------------------
remain in full force and effect, notwithstanding any merger of Assignor's and
Lessee's interest thereunder. Without Assignee's prior written consent,
Assignor shall not convey title to all or any part of the Property to any
Lessee. If Assignee's consent to any such conveyance is obtained, Assignor
shall not make any such conveyance without first requiring the Lessee, in
writing, to assume and agree to pay and perform the Obligations and the Mortgage
in accordance with the terms, covenants and conditions thereof, and to pay so
much of the purchase price as Assignee deems necessary in reduction of the
outstanding principal of the Obligations, in the inverse order of maturity,
which payment, if made during the period that the Obligations permit prepayment,
will include applicable prepayment premiums as set forth in the Obligations.
Any transfer of title to any Lessee must be performed in compliance with the
provisions of the Mortgage. In the event that any Lease permits cancellation
thereof on payment of consideration and said privilege of cancellation is
exercised, the payments made or to be made by reason thereof are hereby assigned
to Assignee to be applied, at the election of Assignee, to the Obligations and
interest thereon in whatever order the Lender shall choose in its discretion or
to be held in trust by Assignee as further security, without interest, for the
payment of the principal and interest required to be paid by the Obligations.
13. Lease Guaranties; Assignments of Leases; Alterations of Premises.
----------------------------------------------------------------
Assignor may do the following with respect to lease guaranties, assignments of
leases, and alterations of premises are as follows: (a) Assignor may terminate
any guaranties of any Lease (other than a guaranty of a Lease of a Major Tenant
or tenant leasing more than 24,000 square feet of the Property) which is in
default; (b) consent to any Lease assignment or subletting (other than the Lease
of a Major Tenant or tenant leasing more than 24,000 square feet) provided that
------
any such lease assignment or subletting does not (i) increase the obligations of
the landlord, (ii) decrease or accelerate the rent, or (iii) decrease the term.
Assignor may not, without the written consent of Assignee: (a) execute any other
assignment or pledge of the Leases, of any interest therein, or of any Rents, or
agree to a subordination of any Lease to any mortgage or other encumbrance now
or hereafter affecting the premises; or (b) permit a material alteration of or
addition to the Property by any Lessee, unless the right to alter or enlarge is
expressly reserved by Lessee in the Lease.
14. Assignor to Ensure Continued Performance under Leases. Assignor shall
-----------------------------------------------------
perform all of its covenants as Lessor under the Leases, and shall not permit
any release of liability of any Lessee or any withholding of rent payments by
any Lessee. Assignor shall promptly deliver to Assignee copies of any and all
notices of default Assignor has sent to any Lessee. Assignor shall enforce at
Assignor's expense any one or more of the Leases and all remedies available to
Assignor thereunder upon any Lessee's default in accordance with reasonable past
business practices. Assignor shall deliver to Assignee copies of all papers
served in connection with any such enforcement proceedings and shall consult
with Assignee, its agents and attorneys with respect to the conduct thereof;
provided that Assignor shall not enter into any settlement of any such
proceeding without Assignee's prior written consent (except in the case of a
settlement concerning a tenant which is (i) not a Major Tenant, or (ii) leasing
less than 24,000 square feet of the Property).
5
<PAGE>
15. Changes in Obligation Terms. Notwithstanding any variation of the
----------------------------
terms of the Obligations and/or the Mortgage, including any increase or decrease
in the principal amount thereof or in the rate of interest payable thereunder or
any extension of time for payment thereunder or the release of any part of the
Property subject to the Mortgage, the terms of this Assignment shall remain
unmodified and in full force and effect.
16. Additions to and Replacement of Obligations. Assignee may take
---------------------------------------------
security in addition to the security already given Assignee for the payments of
the principal, premium and interest required to be paid in or by the Obligations
or release such other security, and may release any party primarily or
secondarily liable on the Obligations, may grant or make extensions, renewals,
modifications or indulgences with respect to the Obligations or the Mortgage and
replacements thereof, which replacements of the Obligations or the Mortgage may
be on the same terms as, or on terms different from, the present terms of the
Obligations or the Mortgage, and may apply any other security held by it to the
satisfaction of the Obligations, without prejudice to any of its rights
hereunder.
17. Additional Leases. Except as otherwise set forth in the Mortgage,
------------------
Assignor shall not enter into any additional Leases or renew any existing Leases
without the prior written consent of Assignee.
18. Exercise of Assignee's Rights and Remedies. Assignee's failure to
-------------------------------------------
avail itself of any of its rights under this Assignment for any period of time,
or at any time or times, shall not constitute a waiver thereof. Assignee's
rights and remedies hereunder are cumulative, and not in lieu of, but in
addition to, any other rights and remedies Assignee has under the Obligations,
the Mortgage and any other Loan Documents. Assignee's rights and remedies
hereunder may be exercised as often as Assignee deems expedient.
19. Severability. If any term of this Assignment or the application
-------------
hereof to any person or set of circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Assignment, or the application of such
provision or part thereof to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Assignment shall be valid and enforceable to the fullest extent
consistent with applicable law.
20. Captions. The captions or headings at the beginning of each
----------
paragraph hereof are for the convenience of the parties only and are not part of
this Assignment..
21. Counterparts. This Assignment may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, and all of which shall
be construed together and shall constitute one instrument. It shall not be
necessary in making proof of this Assignment to produce or account for more than
one such counterpart.
22. Notices. All notices or other written communications hereunder shall
--------
be deemed to have been properly given: (a) upon delivery, if delivered in person
or by facsimile transmission with receipt acknowledged; (b) one business day
after having been deposited for
6
<PAGE>
overnight delivery with any reputable overnight courier service; or (c) three
business days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, addressed as follows:
If to Assignor: Overseas Partners (333) Inc.
c/o Overseas Partners Capital Corp.
115 Perimeter Center Place Suite 940
Atlanta, Georgia 30346
Attention: Legal Department
with a copy to: Overseas Partners Capital Corp.
Mintflower Place
P.0. Box HM 1581
8 Par-la-Ville Road
Hamilton, HM GX Bermuda
Attention: Legal Department
with a copy to: Katten, Muchin & Zavis
525 W. Monroe Street
Suite 2100
Chicago, Illinois 60661
Attention: Nina B. Matis, Esq.
If to Assignee: The Prudential Insurance Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Vice President, Asset Management
Telephone: 770/395-8600
Facsimile: 770/396-9426
with a copy to: Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: David A. Lapins, Esq.
or addressed as such party may from time to time designate by written notice to
the other party.
23. Amendment, Modification or Cancellation of assignment. No amendment,
------------------------------------------------------
modification or cancellation of this Assignment or any part hereof shall be
enforceable without Assignee's prior written consent.
24. Governing Law. This Assignment shall be governed by and construed
-------------
in accordance with the laws of the state in which the Property is located.
7
<PAGE>
25. Power of Attorney. Effective automatically upon the occurrence of an
------------------
Event of Default and Assignee's acceleration of the indebtedness and
continuously thereafter, and without the necessity of the execution of any
further documents or instruments, Assignor hereby constitutes and appoints
Assignee as Assignor's true and lawful attorney, coupled with an interest, in
the name, place and stead of Assignor:
(a) to collect, demand, sue for, attach, levy, recover and receive all
Rents due and payable by Lessees pursuant to the Leases and to give proper
notices, receipts, releases and acquittances therefor and after deducting
expenses of collection, to apply the net proceeds as a credit upon any
portion, as selected by Assignee, of the Obligations, notwithstanding that
the amount owing thereunder may not then be due and payable or that the
Obligation is adequately secured, and Assignor does hereby authorize and
direct such Lessees to deliver such payment to Assignee in accordance with
the foregoing; and
(b) to subject and subordinate at any time and from time to time, the
Leases, to the lien of the Mortgage or any other Loan Documents or any
other mortgage or deed of trust on or to any ground lease of the Property
or to request or require such subordination, where the Assignor otherwise
would have the right, power or privilege so to do. Assignor hereby ratifies
and confirms all acts that Assignee shall do or cause to be done by virtue
of the powers granted hereby and warrants that Assignor has not, on or at
any time prior to the date hereof, exercised any such right of
subordination under this clause (b) and covenants not to exercise any such
right except as may be required by Assignee. The power of attorney
hereunder granted is irrevocable and continuing, shall survive the
insolvency or dissolution of Assignor, and such rights, powers and
privileges shall be exclusive in Assignee, its successors and assigns so
long as any part of the Obligations shall remain unpaid.
26. No Mortgagee in Possession; No Other Liability. The acceptance by
-----------------------------------------------
Assignee of this Assignment, with all of the rights, power, privileges and
authority so created, shall not, prior to entry upon and taking of possession of
the Property by Assignee, be deemed or construed to: (a) constitute Assignee as
a mortgagee in possession nor thereafter or at any time or in any event obligate
Assignee to appear in or defend any action or proceeding relating to the Leases
or to the Property; (b) require Assignee to take any action hereunder, or to
expend any money or incur any expenses or perform or discharge any obligation,
duty or liability under the Leases; or (c) require Assignee to assume any
obligation or responsibility for any security deposits or other deposits
delivered to Assignor by Lessees and not assigned and delivered to Assignee.
Assignee shall not be liable in any way for any injury or damage to person or
property sustained by any person in or about the Property.
27. Successors and Assigns; Gender. The terms, covenants, conditions and
------------------------------
warranties contained herein and the powers granted hereby shall run with the
land, shall inure to the benefit of and bind all parties hereto and their
respective heirs, executors, administrators, successors and assigns, and all
subsequent owners of the Property, and all subsequent holders of the Note and
the Mortgage, subject in all events to the provisions of the Mortgage regarding
transfers of the Property by Assignor. In this Assignment, whenever the context
so requires,
8
<PAGE>
the masculine gender shall include the feminine and/or neuter and the singular
number shall include the plural and conversely in each case. If there is more
than one party constituting Assignor, all obligations of each Assignor hereunder
shall be joint and several.
28. Expenses. Assignor shall pay on demand all costs and expenses
--------
incurred by Assignee in connection with the review of Leases, including the fees
and disbursements of Assignee's outside counsel.
29. Limitation on Personal Liability. Reference is hereby made to the
---------------------------------
portion of the Note entitled "Limitation on Personal Liability", which provision
is hereby incorporated herein by reference to the same extent as if it were set
forth herein.
30. WAIVER OF TRIAL BY JURY. ASSIGNOR HEREBY WAIVES, TO THE FULLEST
------------------------
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THIS ASSIGNMENT, OR ANY ACTS OR OMISSIONS OF
ASSIGNEE IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed by
its duly authorized representative as of the day and year first above written.
ASSIGNOR:
OVERSEAS PARTNERS (333), INC., an Illinois
corporation
By: /s/ Bruce M. Barone
-------------------
Name: Bruce M. Barone
Title: President and CEO
9
<PAGE>
STATE OF GEORGIA )
) ss.
COUNTY OF FORSYTH )
I, Elise R. Kitchens, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that the foregoing instrument was
acknowledged before me this 27thday of August by Bruce M. Barone as a duly
---- ------
authorized signatory of OVERSEAS PARTNERS (333), INC., an Illinois corporation,
on behalf of said corporation.
GIVEN under my hand and Notarial Seal this 27th day of August, 1997.
---- -------
/s/ Elise R. Kitchens
---------------------
Notary Public
My Commission Expires:
12-12-2000
----------
10
<PAGE>
EXHIBIT A
---------
Legal Description
-----------------
Parcel 1:
- ---------
Lots 7, 8 and 9 in Assessor's Division of Lots 1, 2, 3, 7 and 8 and the East 20
feet of Lot 6 in Block 21 in Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the Third Principal Meridian, in Cook County, Illinois.
Parcel 2:
- ---------
the East 1/4 of Lot 6 and the West 1/4 of Lot 7 in Block 21 in Original Town of
Chicago, otherwise known as Lots 10 and 11 in Assessor's Division of Lots 1, 2,
3, 7 and 8 and the East 20 feet of Lot 6, all in said Block 21 in Original Town
of Chicago, in the City of Chicago, in Cook County, Illinois.
Parcel 3:
- ---------
All of Lot 5 and the West 1/2 of Lot 6 and the West 1/2 of the East 1/2 of Lot
6, all in Block 21 in the Original Town of Chicago, in Cook County, Illinois.
Parcel 4:
- ---------
The East 1/4 of Lot I and that part of the vacated alley lying South and
adjoining said land in Block 21 in the Original Town of Chicago in Section 9,
Township 39 North, Range 14, East of the Third Principal Meridian, in Cook
County, Illinois.
Parcel 5:
- ---------
The West 1/2of the East 1/2 of Lot I and that part of the vacated alley lying
South and adjoining said land in Block 21 in Original Town of Chicago in the
South fractional 1/2 of Section 9, Township 39 North, Range 14, East of the
Third Principal Meridian, in Cook County, Illinois.
Parcel 6:
- ---------
Lots 3, 5 and 6 in Assessors Division of Lots 1, 2, 3, 7 and 8 and the East 20
Feet of Lot 6 in Block 21 in Original Town of Chicago in Section 9, Township 39
North, Range 14, East of the Third Principal Meridian in Cook County, Illinois.
Parcel 7:
- ---------
The East 1/2of Original Lot 8 in Block 21 in the Original Town of Chicago in the
South East 1/4 of Section 9, Township 39 North, Range 14, East of the Third
Principal Meridian, sometimes also described as:
Lot 4 in Assessor's Division of lots 1, 2, 3, 7, 8 and the East 20 feet of Lot 6
in Block 21 in Original Town of Chicago, in the South East 1/4 of Section 9,
Township 39 North, Range 14, East of the Third Principal Meridian, in Cook
County, Illinois.
Permanent Index Numbers: 17-09-412-013-0000 and 17-09-412-014-0000
Property Address: 333 West Wacker Drive, Chicago, Illinois 60606
<PAGE>
EXHIBIT B
---------
DESCRIPTION OF LEASES
---------------------
B-1
<PAGE>
TILTON & LEWIS ASSOCIATES SHELDON F. GOOD REALTY, INC.
SUITE NO: 200 SUITE NO: 450
SqFt-RA 9522 SqFt-RA: 7150
SANCHEZ & DANIELS HAGGERTY, KOENIG & HILL
SUITE NO: 500 SUITE NO: 510
SqFt-RA. 20886 SqFt-RA: 3162
FORENSIC TECHNOLOGIES ARBOR OFFICE SUITES
INTERNATIONAL SUITE NO: 700
SUITE NO: 600 SqFt-RA: 24586
SqFt-RA 6410
NYHAN, PFISTER, BAMBRICK & KINZIE COMPASS MANAGEMENT &LEASING
SUITE NO 810 SUITE NO: 880
SqFt-RA 8212 SqFt-RA: 2842
PERFORMANCE ANALYTICS, INC. JAMES, LAYTON INTERNATIONAL, INC.
SUITE NO: 1010 SUITE NO: 1050
SqFt-RA 10199 SqFt-RA: 2398
CASSIDAY, SCHADE & GLOOR CARNOW, CONIBEAR & ASSOCIATES, LTD.
SUITE NO: 1100 SUITE NO: 1400
SqFt-RA 14513 SqFt-RA: 18818
FACILITY CAPITAL CORPORATION TETRA PAK, INC.
SUITE NO: 1750 SUITE NO: 1500/1620
SqFt-RA 3562 SqFt-RA: 34226
GROSVENOR CAPITAL MGMT, L.P. SKADDEN, ARPS, SLATE, MEAGHER & FLOM
SUITE NO: 1610 SUITE NO: 1900/2050
SqFt-RA 2427 SqFt-RA: 32269
BULGARIAN AMERICAN ENTERPRISES URBAN INVESTMENT & DEVELOPMENT
SUITE NO: 2080 SUITE NO: 2000/2100/2200/2300/2400
SqFt-RA 2333 SqFt-RA: 94864
FEDERAL HOME LOAN MORTGAGE BURDITT & RADZIUS, CHTD.
SUITE NO: 2500 SUITE NO: 2600
SqFt-RA 25344 SqFt-RA: 25714
B-2
<PAGE>
BARACK, FERRAZZANO, KIRSCHBAUM HORWOOD, MARCUS & BRAUN
SUITE NO: 2700/2850 SUITE NO: 2800
SqFt-RA 32278 SqFt-RA 11010
AMERITECH K.D.S. RAILINC/AAR
SUITE NO: 2900 SUITE NO: 2950
SqFt-RA 15612 SqFt-RA 10061
JOHN NUVEEN & CO., INC. ECC, INC.
SUITE NO: 3100/3200/3300/3400/3500/3600 SUITE NO: BOX2ECC
SqFt-RA 113675 SqFt-RA 0
UPS METROPOLITAN FIBER SYSTEMS
SUITE NO: BOX1UPS SUITE NO: BOX4MET
SqFt-RA 0 SqFt-RA 0
FIRST CHICAGO BUILDING CORP. HEFTER & RADKE
SUITE NO: BOX3CASH SUITE NO: 1650
SqFt-RA 0 SqFt-RA 7663
CASSIDAY, SCHADE & GLOOR BAIN & COMPANY, INC.
SUITE NO: 1200 SUITE NO: 3000
SqFt-RA 34659 SqFt-RA 14996
NATIONAL EQUITY ADVISORS 2020 ASSOCIATES
SUITE NO: 2070 SUITE NO: 2020
SqFt-RA 3037 SqFt-RA 4533
FALLON MCELLIGOTT CASSIDAY, SCHADE & GLOOR
SUITE NO: 1430 SUITE NO: 850
SqFt-RA 1798 SqFt-RA 1411
FEDERAL EXPRESS #12 KARAD DRUG CO., INC.
SUITE NO: BOX5FEDEX SUITE NO: L020
SqFt-RA 0 SqFt-RA 1200
BARACK, FERRAZZANO, KIRSCHBAUM FEDERAL HOME LOAN MORTGAGE
SUITE NO: 2860 SUITE NO: 210
SqFt-RA 5043 SqFt-RA 9460
KATZ, RANDALL & WEINBERG MCI METRO
SUITE NO: 1700/1800 SUITE NO: BOX6MCI
SqFt-RA 25224 SqFt-RA 198
B-3
<PAGE>
PEPI CORPORATION ROSE AND ASSOCIATES
SUITE NO: L010 SUITE NO: 1710
SqFt-RA 2439 SqFt-RA 3422
LINDA'S MAGIC NAILS KENWOOD ASSOCIATES, INC.
SUITE NO: M100 SUITE NO: 400
SqFt-RA 868 SqFt-RA 12130
VTEL CORPORATION SPECTRA/MARKET METRICS
SUITE NO: 1060 SUITE NO: 900
SqFt-RA 2410 SqFt-RA 14875
TELIGENT FIRSTCORP
SUITE NO: R100 SUITE NO: 240
SqFt-RA 0 SqFt-RA 1127
NATIONSCREDIT COMMERCIAL CORP. GROSVENOR CAPITAL MGMT, L.P.
SUITE NO: 1840 SUITE NO: 1600
SqFt-RA 3702 SqFt-RA 6984
GROSVENOR CAPITAL MGMT, L.P. BARACK, FERRAZZANO, KIRSCHBAUM
SUITE NO: 1605 SUITE NO: 2820
SqFt-RA 108 SqFt-RA 3189
HARRIS, ROTHENBERG INTERNATIONAL JOHN NUVEEN & CO., INC.
SUITE NO: 1015 SUITE NO: 3010
SqFt-RA 1391 SqFt-RA 4835
MANSON VENTURES, INC. CASTLE CREEK PARTNERS, LLC
SUITE NO: 1450 SUITE NO: 1410
SqFt-RA 1419 SqFt-RA 2185
BLATT, HAMMESFAHR & EATON TETRA PAK INC.
SUITE NO: M101 SUITE NO: 250
SqFt-RA 0 SqFt-RA 800
MACKELVIE & ASSOCIATES FACILITY CAPITAL CORPORATION
SUITE NO: 950 SUITE NO: 1730
SqFt-RA 3924 SqFt-RA 1518
B-4
<PAGE>
EXHIBIT C
---------
TENANT PURCHASE OPTIONS, FIRST REFUSAL RIGHTS
---------------------------------------------
AND RIGHTS/OPTIONS FOR ADDITIONAL SPACE
---------------------------------------
C-1
<PAGE>
333 West Wacker Drive
Summary of Options to Expand
As of: August 15,1997
Tilton and Lewis Associates, Inc. (2nd Floor) (5/l/86 - 4/30/01)
- ----------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant had option to
expand into approximately 3,000 sq. ft. on 2nd floor,
effective 5/l/91 with notice to LL by 2/l/90. Option
not exercised.
Sheldon F. Good Realty, Inc. (4th Floor) (2/l/87 - 11/30/991
- ------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant shall have the
option to expand between 1,633 and 2,209 sf of
contiguous space on the 4th Floor. Tenant must occupy
the entire Premises on both the date that Tenant
exercises the Expansion Option and on the Expansion
space Occupancy Date. Tenant may exercise Expansion
Option by giving written notice to LL by 2/15/97.
Within (60) days following LL's receipt of the
Expansion Space Notice, LL shall specify in a written
notice to Tenant the location, size, and
configuration of the Expansion Space. If Tenant
exercises Expansion Option, then commencing 7/l/97,
Expansion space shall be part of Premises except as
hereinafter provided: the annual base rent of the
Expansion Space shall be equal to the square foot
amount of then applicable rent times the rentable
area of the Expansion Space and pro-rate share shall
be adjusted for the Expansion Space.
Kenwood Associates, Inc. (Suite 400 & 460) (3/l/96 - 2/28/2002)
- ---------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant has the right
to expand between 2,635 and 3,525 contiguous rsf in
suite 470. The occupancy date shall be between
3/l/97-8/l/97 with 4 months prior notice. If Tenant
elects to take the $7.95/sf Expansion Allowance base
rent shall be $5.18/sf the first year growing at
3.65% every March 1st. If Tenant elects to take the
$2.65/sf Expansion Allowance the base rent shall be
the same per sf as the Premises. Pro-rata share shall
be adjusted to reflect Expansion Space.
Sanchez and Daniels (Suite 500) (3/l/92 - 2/28/02)
- --------------------------------------------------
(T) Option to Expand: Tenant has two (2) Expansion Options, as follows
(Notification Date has elapsed):
First Expansion Option:
-----------------------
- Premises: Approximately 3,500 sq. ft. (exact number
to be determined by LL) of contiguous space on 5th
floor, at location to be determined by LL. Exercise
Date: Notice from Tenant to LL by 3/l/95
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- LL shall notify Tenant by 4/l/95 setting forth (i)
location and square footage of expansion space;
(ii) Base Rent; and (iii) effective date on which
LL shall deliver possession (which date shall be
between 9/l/95 9/l/96)
- Base Rent: same per sq. ft. amount as for original
premises, including increases.
- Tenant Improvements: $7.50/sq. ft.
- Pro-rata share: shall increase accordingly
Second Expansion Option:
------------------------
- Premises: Approximately 3,500 sq. ft. (exact number
to be determined by LL) of contiguous space on5th
floor, at location to be determined by LL. In any
event, such space shall include the area located
between the midrise elevator lobby on the 5th floor
containing approximately 507 sq. ft. Exercise Date:
Notice from Tenant to LL by 3/l/97
- Availability of Second Expansion Option is not
conditioned on exercise by Tenant of First
Expansion Option.
- LL shall notify Tenant by 4/l/97 setting forth (i)
location and square footage of expansion space;
(ii) Base Rent; and (iii) effective date on which
LL shall deliver possession (which date shall be
between 9/l/97 9/l/98)
- Base Rent: same per sq. fL amount as for original
premises, including increases.
- Tenant Improvements: $5.00/sq. ft.
- Pro-rata share: shall increase accordingly
LL shall have right to increase/decrease the
rentable area of either of the Expansion Premises
by not more than 20%, with notice to Tenant no
later than 6 months prior to the Effective Date
with respect to such expansion.
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- ------------------------------------------------------------------------
(T) Option to Expand: Premises: 2,000 sq. ft. (the exact square footage
to be determined by LL) in Building on the same
floor as and contiguous to premises at a location
on such floor to be designated by LL.
- Notice from Tenant to LL by 3/l/96
- If exercised, LL shall give written notice to
Tenant by 4/l/96 specifying; (i) exact location and
number of rentable sq. ft.; (ii) Base Rent, which
shall be computed as $6.00/sq. ft. net; and (iii)
the effective date on which LL shall deliver
possession of Expansion Space to Tenant (which date
shall be between 5/l/96 -1/l/97).
- LL may lease space to another tenant prior to the
expansion date
- LL may change the size of the rentable area of the
Expansion Space upon notice to Tenant by 4/l/96;
provided, LL shall not increase/decrease the
rentable area by more than 15%.
- Tenant improvements shall be $10.00/sq. ft.
- Pro-rata share shall be increased accordingly.
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Nyban, Pfister, Bambrick & Kinzie, P.C. (8th Floor) (2/l/92 - 1/31/02)
- ----------------------------------------------------------------------
(T) Option to Expand: Premises: 2,500 sq. ft. of space contiguous and on
the same horizontal plane to the Premises.
(Notification Date has elapsed)
- Effective Date: 2/l/96
- Notice: Either (i) 12/l/94 - 1/31/95 ("Early
Notice Period"); or (ii) 2/l/95
- 4/30/95 ("Late Notice Period")
- Base Rent: Same per sq. ft. rates as set forth for
original premises
- TI Allowance: $10.00/sq. ft.
- Pro-rata share: shall increase accordingly.
- If Early Notice Period, LL shall deliver to Tenant
notice by 2/28/95 ("LL's Expansion Notice") (a)
describing layout of Expansion Space; and (b)
setting forth whether there are any changes in (i)
square footage of Expansion Space; or (ii)
Effective Date. Tenant shall have 15 days to
provide notice to LL whether terms of LL's
Expansion Notice are acceptable to Tenant. If
Tenant rejects the terms, Tenant may withdraw it's
notice electing to expand. If withdrawn, Tenant
shall be precluded from exercising said option
during the Late Notice Period.
- If exercised during Late Notice Period, then on or
before 5/30/95 LL shall deliver to Tenant "LL's
Expansion Notice" which shall be binding on LL and
Tenant.
- LL may accelerate or defer the Effective Date by a
period of not more than 6 months by so notifying
Tenant at least 8 months prior to the Effective
Date (6/l/95), which notice shall state the new
Effective Date. LL shall maintain right to lease
Expansion Space to another tenant for a term not to
exceed the Effective Date of this Expansion Option.
- LL may increase/decrease the size of the Expansion
Premises by not more than 10% by so notifying
Tenant at least 8 months prior to the Effective
Date (6/l/95).
Spectra Marketing Systems, Inc. (Suite 900) (7/15/96 - 1/31/05)
- ---------------------------------------------------------------
(T) Option to Expand: Option A (Notification Date has elapsed);
--------
Tenant has the right to lease between 2,000 and
3,000 contiguous rsf on the 9th floor. Tenant must
give written notice to LL by 10/15/96. Within 60
days LL shall provide a written notice containing
the location site, configuration and the occupancy
date of the Expansion Space. The Occupancy Date
must be between 1/15/97 and 1/14/98. Rent will
be the same rate as then applicable rate for the
Original Premises. LL shall provide $23.00/sf for
Tenant Improvements. Expansion Space will become
part of the Premises and Pro-rata shall be adjusted
accordingly. If LL cannot deliver possession of the
expansion within six (6) months of LL's specified
Date, Tenant may rescind.
Option B:
---------
If Tenant does not exercise Expansion Option A,
Tenant may exercise Expansion Option B by giving
written notice to LL by 10/15/99. Within 60 days LL
shall provide a written notice containing the
location site, configuration and the occupancy date
of the Expansion Space. The Occupancy date must be
between 1/15/2000 and 1/14/2001. Rent will be
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
the same rate as then applicable rate for the
Original Premises. LL shall provide $15.00/sf for
Tenant Improvements. Expansion Space will become
part of the Premises and Pro,-rata shall be
adjusted accordingly.
Cassiday, Schade & Gloor (lltb and 12th Floors - 34,659 sq. ft.) (3/l/83 -
- --------------------------------------------------------------------------
2/28/98)
- --------
(T) Option to Expand: Tenant has three (3) expansion options, as follows
(Notification Dates have elapsed):
First Expansion Option (independent of 2nd & 3rd
----------------------
Options)
- Premises: 2,842 sq. ft. on 8th floor
- Effective Date: 6/l/90, 6/l/92 or 12/l/94 (first
availability based upon existing tenancies)
- Notice Date: 18 months prior to latest Effective
Date
Second expansion Option (independent of 1st and
-----------------------
3rd Options)
- Premises: 13,532 sq. ft. on 8th floor
- Effective Date: 7/l/90 or 11/l/94 (first
availability based upon existing tenancies)
- Notice Date: 18 months prior to latest Effective
Date
Third Expansion Option (independent of 1st and 2nd
----------------------
Options)
- Premises: 8,212 sq. ft on 8th floor (balance of 8th
floor)
- Effective Date: 1 1/24/89 or 12/l/94 (first
availability based upon existing tenancies)
- Notice Date: 18 months prior to latest Effective
Date
All above described Expansion Options have the
following terms:
- Rent:100% of market. LL shall notify Tenant of its
determination of such FMV within 90 days of
Tenant's notice to LL exercising it's expansion
option. If Tenant and LL cannot agree on Base Rent,
Tenant may cancel its election to lease such
additional space in-written notice to LL within 30
days after LL's notice to Tenant specifying such
Base Rent.
- Tenant Improvements: None. Space to be taken "as
is" except LL shall make any repairs to such space
made necessary by fire or casualty.
- Pro-rata Share: To be increased accordingly.
NOTE: Based upon the 18 month Tenant notification
period, Tenants rights under these expansion
options have expired.
Carnow, Conibear & Associates, Ltd. (14th Floor) (9/15/85 - 12/31/03)
- ---------------------------------------------------------------------
(T) Option to Expand: First Expansion option:
-----------------------
- Premises: 3,235 sq. ft. on ]4th floor (see
attached)
- Notice to LL: By 7/l/98.
- Effective Date: Between 10/l/98 and 7/l/99
(Landlord shall notify Tenant of Effective Date
within 30 days after exercise).
- Base Rent: Rate per sf for the remainder of
Premises, including increases.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- Tenant Improvements: $20.00/sf (any unused
allowance shall be applied towards first rents
due).
Second Expansion Option:
------------------------
- Premises: 2,21 1 sf on 14th floor, currently leased
to Broker Investment Management (see attached).
- Notice to LL: By 3/15/01.
- Effective Date: Between 9/15/01 and 3/15/02
(Landlord shall notify Tenant of Effective Date
within 30 days after exercise).
- Base Rent: Rate per sf for remainder of Premises,
including increases.
- Tenant Improvements: None
NOTE: Second expansion rights are subject to the
rights of Broker Investment Management to exercise
its option to renew.
- LL may lease such space to other tenants prior to
Effective Date; however, if LL does not deliver
possession on or before 150th day following the
Effective Date, Tenant may withdraw exercise of
expansion option by delivering notice to LL by the
160th day following the scheduled Effective Date.
Tetra Pak, Inc. (15th & 16th Floors) (9/l/91 - 8/31/01)
- -------------------------------------------------------
(T) Option to Expand: Tenant had option to expand into approximately
16,000 sq. ft. on either floor contiguous to
premises with notice to LL by 1/l/93. Not exercised
(T) Option to Expand: Tenant may expand into 1,500- 21000 sf on the 16th
floor, upon notice to LL between 9/l/96 - 9/8/97.
LL shall have 10 business days after receipt of
Tenants election to exercise to notify Tenant of
exact location and square footage and the effective
date ("Expansion Space Addition Date," which shall
between 12/l/97-9/l/98). The Base Rent shall be
equal to the then applicable fair market value
rent. If Tenant disagrees with LL's -determination
of the fair market value rent then Tenant may
cancel exercise of expansion option via notice to
LL within 30 days of LL's notice to Tenant
specifying Base Rent.
Option to expand is subject to the rights of Hefter
Radke to lease the Expansion Space.
Grosvenor Capital Management. L.P. (16th Floor) (3/l/93 - 5/31/99)
- -------------------------------------------------------------------
(T) Option to Expand: (EXPIRED) Notice Date was between (3/l/96 -
5/31/96). Tenant did not exercise per Property
Manager.
Hefter & Radke (Suite 1650) (4/15/89 - 2/28/01)
- -----------------------------------------------
(T) Option to Expand: Tenant may expand into 1,629 sf of additional space
that is contiguous with the eastern wall of the
Premises on the 16th floor (ie; Suite 1660), upon
Page 5
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
notice to LL by 9/l/97, such Expansion to be
effective 9/l/98.. The Base Rent shall be equal to,
and increase with, the then applicable rental rate
per sq. ft. for the Premises. Tenant shall receive
a T.I. allowance of $20.00/rsf of Expansion Space.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- -------------------------------------------------------------
(T) Option to Expand: Premises: Same as Right of First Refusal ("ROFR")
space described above (1,780 sq. ft. - 17th floor).
- Available at any time during initial term, if
Tenant has not waived rights to such space pursuant
to ROFR above.
- Tenant shall exercise by giving written notice to
LL. LL shall give written notice to Tenant within
10 days following receipt of Tenant's notice
setting forth the date on which LL shall deliver
possession of the Option Space.
- Base Rent and tenant improvements described above
for the ROFR are applicable.
- LL retains the right to lease Option Space to
another tenant, subject to rights of Tenant
pursuant to ROFR.
Katz Randall & Weinberp- (1700 & 1800) (II/l/95 - 4/30/08)
- ----------------------------------------------------------
(T) Put Space: Tenant shall lease approximately 3,500 sf (see
attached) on the 17th floor effective 12/l/98. LL
may reduce the size of the put space, but not less
than 3,000 sf, provided such decrease does not
destroy the contiguity to the Premises, in a way
that is reasonably acceptable to the Tenant. LL
shall notify Tenant by 8/l/98 as to the rentable
area to be included. Rent shall be the then
effective rate under the Lease and the pro-rata
share shall be appropriately adjusted. Tenant shall
receive an improvement allowance of $35.75/sf (up
to $6.00/sf may be applied to soft costs or rent as
described under Tenant Improvements on page 2).
LL may lease such space to another tenant for a
term ending on or prior to 9/l/98. LL shall not be
liable to Tenant in the event of tenant holding
over or other violation of the lease .
(T) Option to Expand: Provided Tenant is occupying 80% of Premises for
its own use, Tenant may expand into the additional
space as follows:
Expansion One:
--------------
Effective: 11/1/00
Notice: 11/l/99
Size: 5,000 sf on the 18th floor as highlighted on
Exhibit A-3 (see attached). LL may change the size
(not to decrease by more than 20% or increase) in a
manner reasonably satisfactory to Tenant upon
notice by 3/l/00
Rent: Same rate/sf as for existing Premises
Improvement Allowance: $25.00/sf with up to
$4.25/sf applied as outlined on page 2 of abstract
for unspent amounts.
Page 6
<PAGE>
- -------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Expansion Two:
--------------
Effective: 11/l/03
Notice: 11/1/02
Size: 5,000 sf on the 18th floor as highlighted on
Exhibit A-3 (see attached). LL may change the size
(not to decrease by more than 20% or increase more
than reduction in 1st Option space) in a manner
reasonably satisfactory to Tenant upon notice by
3/l/03.
Rent: Same rate/sf as for existing Premises
Improvement Allowance:
$15.00/sf with up to $2.55/sf applied as outlined
on page 2 of abstract for unspent amounts.
LL may defer or accelerate the Addition Date up to
6 months upon notice at least 8 months prior to the
earlier of the Accelerated Date or the stated
Addition Date. LL may lease such space to another
tenant for a term expiring on or before the
Addition Date. LL shall not be liable to Tenant in
the event of tenant holding over or other violation
of the lease.
Rent shall not commence on Expansion Space I or 2
until 8 weeks after the later of the Addition Date
and the date of possession is delivered to Tenant.
Skadden, Arps, Slate, Meaeher & Flom (19th & 20th Floors) (12/5/88 - 4/30/2000)
- -------------------------------------------------------------------------------
(T) Option to Expand: Tenant had the option to expand into 3,037 sq. fL
on 20th floor effective 1/1/91, and had a second
option to expand into the balance of the 20th floor
effective 5/l/95. If Tenant elected not to exercise
any expansion option, Tenants rights to such option
as well as any subsequent expansion options would
extinguish. Since Tenant did not exercise expansion
option for 3,037 sq. ft., they apparently no longer
have the option to expand into the balance of the
20th floor.
Federal Home Loan Mortgage Corporation (25th Floor) (2/l/86 - 4/30/99)
- ----------------------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Premises: Not less
than 6,375 sq. ft. nor more than 8,625 sq. ft.
(exact number to be determined by LL) on 29th
floor, at a single location on such floor to be
designated by LL.
- Exercise Date: Notice to LL by 5/l/96
- Base Rent: Same per sq. ft. as for existing
premises
- Tenant Improvements: $17.50/sq. ft.
- Pro-rata Share: increased accordingly
If exercised, LL shall give notice to Tenant by
6/l/96 setting forth (i) exact location and number
of rentable sq. ft. within Expansion Space; and
(ii) effective date on which LL will deliver
possession of Expansion Space (between 11/l/96 -
11/l/97)
If LL is unable to deliver possession of Expansion
Space to Tenant on or prior to 60th day following
scheduled Effective Date, and if Tenant so elects,
LL shall use diligent efforts to make immediately
available to Tenant temporary space for occupancy
by Tenant until the 120th day following the
Page 7
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
date on which the Expansion Space is delivered to
Tenant. LL and Tenant shall execute a short term
lease to govern Tenant's occupancy of such
Temporary Space. No rent shall be paid by Tenant
for Temporary Space. However, Tenant shall pay its
pro-rata share of taxes and operating expenses on a
net basis.
If LL fails to deliver possession on or prior to
180th day following scheduled Effective Date,
Tenant may withdraw it's exercise of expansion
option by delivering written notice to LL on or
before 10th day following expiration of said 180
day period.
(T) Option To Expand: (Notification Date has elapsed) Provided Tenant
occupies the entire Premises as of the Addition
Date, Tenant may lease any space not leased on the
second floor as of the date of the Fifth Amendment.
Tenant shall give notice to LL by 1/31/96. Rent
shall be $14.30/sf plus a pro-rata share of
operating expenses and real estate taxes. Tenant
shall receive an improvement allowance equal to the
product of $I5.00/sf multiplied by the number of
months remaining in the term divided by 51.
LL may lease the Second Floor Expansion space to
another tenant and LL shall not be held liable in
the event LL does not deliver possession due to a
holding over, provided LL uses diligent efforts to
obtain possession. If LL is unable to deliver
possession of Expansion Space to Tenant on or prior
to 60th day following scheduled Effective Date, and
if Tenant so elects, LL shall use diligent efforts
to make immediately available to Tenant temporary
space for occupancy by Tenant until the 120th day
following the date on which the Expansion Space is
delivered to Tenant. LL shall pay all reasonable
out-of-pocket costs incurred in connection with
Tenant's move to the Temporary space. LL and Tenant
shall execute a short term lease to govern Tenant's
occupancy of such Temporary Space. No rent shall be
paid by Tenant for Temporary Space. However, Tenant
shall pay its pro-rata share of taxes and operating
expenses on a net basis.
If LL fails to deliver possession on or prior to
180th day following scheduled Effective Date,
Tenant may withdraw it's exercise of expansion
option by delivering written notice to LL on or
before 10th day following expiration of said 180
day period.
Barack, Ferrazzano, Kirschbaum & Perlaman (27th and 28th Floors) (1012/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Option to Expand: Tenant has five (5) expansion options, as follows:
Expansion Option #1: (Has Expired)
--------------------
- Premises: 5,043 sq. ft. on 28th floor ("First
Additional Space"), currently leased to Chilmark
Partners
- Effective Date: 5/l/90, if FHLMC fails to
exercise its option to lease such space by 12/l/89.
Expansion Option #2: (Has Expired)
---------------------
- Premises: 4,000 sq. ft. ("Interim Additional
Space") at any location in building provided that
LL will use reasonable efforts to locate the
Interim Additional Space on a high-rise floor.
Page 8
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
- Effective Date: 5/l/90, if FHLMC exercises its
option by 12/l/89 to lease the First Additional
Space.
Expansion Option #3:(Exercised via 3rd Amendment)
-------------------
- Premises: 28th floor First Additional Space
(5,043 sq. ft. - see Option # 1)
- Effective Date: 9/l/95, if FHLMC exercises its
option to lease the First Additional Space.
Expansion Option #4:
--------------------
- Premises: Between 2,900 - 4,800 sq. ft.
(determined by LL) on 28th floor, a portion of
which is currently occupied by John Nuveen & Co.
("Second Additional Space")
-Effective Date: 9/l/95
Per Letter Agreement dated 6/22/94, Tenant waived
its right to exercise Expansion Option # 4.
Expansion Option #5:
--------------------
-Premises: Between 12,600 - 14,600 sq. ft
(determined by LL) constituting the balance of the
28th floor ("Third Additional Space")
-Effective Date: 3/l/2000
- Tenant Notification Date: 13 - 18 months prior to
respective Effective Date.
- No later than 18 months prior to Effective Date,
for 4th and 5th Expansion Options (3/l/94 and
9/l/98, respectively), LL shall notify
Tenant of exact location and rentable area of the
additional space. Such space shall be continuous
with the then current premises. - If Tenant does
not exercise, Tenant shall have no further rights
with respect to such Expansion Option, provided
that Tenant shall not be deemed to have waived any
other Expansion Options.
-Base Rent for each Expansion Option shall be 100%
of market, subject to any flat rate, indexed or
other material escalations to which market rate
base rental is then subject. Such rent and
escalations shall be set forth in a certificate
delivered by LL to Tenant no later than 90 days
after LL receives Tenant's notice of its exercise
of the Expansion Option with respect to a
particular Additional Space. If LL and Tenant can
not agree on rental, Tenant may cancel its exercise
of the Expansion Option in notice to LL not later
than 30 days after Tenant's receipt of such
certificate.
LL may (i) defer the Effective Date for any
Additional Space by a period of not more than 18
months; or (ii) accelerate the Effective Date for
the Second Additional Space and Third Additional
Space by a period of not more than 9 months, upon
notice to Tenant specifying the new Effective Date
given no later than the later of (a) 3 months prior
to the latest date Tenant may give notice of
exercise of Expansion Option with respect to such
Additional Space (the "Final Notice Date"); and (b)
30 days after delivery of Tenant's notice of
exercise of the Expansion Option with respect to
such Additional Space, in which event Tenant may
withdraw such notice of exercise on or before the
later of. five (5) days after the Effective Date
Notice is given or the Final Notice Date.
Page 9
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Subject to the rights of Tenant hereunder, LL
shall in any event have the right to lease the
Additional Space to another tenant and shall not be
liable to Tenant in the event that LL cannot
deliver possession of the Additional Space to
Tenant on account of a holding over by such other
tenant. -If, due to the holding,
over of such other tenant, LL is unable to deliver
possession of Additional Space within one (1) year
after the Effective Date, LL shall, by written
notice to Tenant as soon as practicable after
expiration of such one year period, either (i)
offer Tenant a comparable amount of space in the
Building (to be identified in LL's notice) for
occupancy by Tenant beginning no later than 30 days
after the first anniversary of such Effective Date
until such Additional Space is available (which
temporary space shall be constructed, at LL's sole
cost, with reasonably usable building standard
improvements suitable for law offices) at a base
rent equal to 50% of base rent otherwise payable
under the terms of this paragraph for the
Additional Space LL is then unable to deliver,
provided that Tenant will be obligated to pay full
pass firms of Operating Expenses and Taxes, or (ii)
offer Tenant the option to terminate this lease. If
Tenant fails to notify LL within ten (IO) days
after LL's offer notice of Tenant's election to
accept the offer made, Tenant shall be deemed to
have rejected the offer and waived any remedy for
damages or termination by reason of LL's failure to
deliver the Premises, provided that such waiver
shall not relieve LL of its obligation to use
reasonable efforts to obtain possession of such
Additional Space.
-LL may increase the rentable area of the First
Additional Space by up to 5% or decrease the
rentable area by no more than 15%
LL may increase the rentable area of the Second
Additional Space and the Interim Additional Space
by up to IO% or decrease the rentable area by no
more than 15% (i.e., Second Additional Space may be
decreased to 5, 1 85 sq. ft. or increased to 8,800
sq. ft.)
LL may increase the rentable area of the Third
Additional Space by up to 15% or decrease the
rentable area by no more than 20% (i.e., Third
Additional Space may be decreased to 10,080 sq. ft.
or increased to 16,790 sq. ft.)
LL will notify Tenant of any change in rentable
area of any Additional Space no later than the
later of- (A) three (3) months prior to the Final
Notice Date and (B) thirty (30) days after the
delivery of Tenant's notice of exercise of the
Expansion Option with respect to such Additional
Space, in which event, Tenant may withdraw such
notice of exercise on or before the later of- five
(5) days after LL's notice of the change in the
rentable area of such Additional Space is given or
the Final Notice Date.
-T.I. For Each Additional Space: Space taken "as-
is", except for construction allowances or labor or
materials included at LL's expense being offered in
connection with prevailing market rate leases. If
Tenant employs LL's general contractor to perform
construction or remodeling
work in any Additional Space, LL to limit fee for
overhead, administration and supervision (which fee
is in addition to any general contractor's fee) to
8% of the cost of such improvements.
Page 10
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-As Additional Space is delivered to Tenant, such
space shall become part of the Premises and
Tenant's pro-rata percentage and Additional Rent
payments shall change accordingly.
Bain & Company, Inc. (30th Floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Option to Expand: (Notification Date has elapsed) Tenant shall have
the right to expand into 3,000 rsf on the 30th
floor (Expansion Space #1) on 10/14/97 upon notice
to LL by 1/14/97 (see attached for floor plan of
Expansion Space). Tenant's rights with respect to
the additional space are subject to the following
provisions:
Base Rent : Same rate per sf as in effect for the
initial premises. Tenant's proportionate share
shall be appropriately adjusted.
LL's Rights: LL may, upon notice to Tenant before
the Notice Date, accelerate or defer Addition Date
by not more than 3 months or change the size of the
Additional Space by not more than 20%. LL shall
have the right to lease Additional Space to another
tenant for a term not beyond the applicable
Addition Date and shall not be liable to Tenant in
the event that LL cannot deliver possession due to
holdover by such other tenant. If LL cannot deliver
possession within 6 months of the Addition Date,
Tenant shall have the right to cancel its election
to lease such Additional Space.
Tenant Improvements Additional Space #1: $42.25/sf
Page 11
<PAGE>
333 West Wacker Drive
Summary of Rights of First Offer/Refusal
As of: August 15, 1997
Sheldon F. Good Realty, Inc. (4th Floor) (2/l/87 - M-T-M)
- ---------------------------------------------------------
(T) Right of Second Offer: Subject to the rights of Wood, Lucksinger and
Epstein, if LL intends to lease any space on the
4th floor which is contiguous to the premises
("Option Space") during the initial or renewal
term, LL shall offer such space to Tenant in
writing. Such offer shall specify Base Rent at
which LL would be willing to lease such space to
Tenant. Tenant must accept within 10 days
business days. If Tenant does not accept, LL
shall be free to lease such space to another
party on whatever terms and conditions it
considers appropriate.
Correspondence in File:
-----------------------
Letter from JMB dated 5/23/90, notifying Tenant
of LL intention to lease a portion of the
4thfloor, containing 1,876 sq.ft. Base Rent of
$22.50/sq.ft., on month-to-month basis, with 60
day termination notice. No response .from Tenant
found in file.
Sanchez and Daniels (Suite 500) (3/l/92 - 2/28/021
- --------------------------------------------------
(T) Right of First
Refusal: Premises: Any space on 5th floor ("Option
Space")
If during initial term LL receives a
letter of intent from 3rd party to lease Option
Space and provided LL would be willing to lease
such space upon terms set forth in letter of
intent, LL shall deliver a statement as to the
material terms of such letter of intent to
Tenant, and Tenant shall have seven (7) business
days therefrom to elect to lease such Option
Space at same Base Rent and upon same terms as
contained in letter of intent.
If Tenant does not exercise, LL shall be free to
lease such Option Space to 3rd party on
substantially the same terms as are set forth in
letter of intent.
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- -------------------------------------------------------------- --------
(T) Right of First
Refusal: Premises: 6th floor space contiguous to premises
("Offer Space")
- If during initial term LL receives a letter of
intent from any 3rd party to lease the Offer
Space and provided LL would be willing to lease
such space on terms set forth in the letter of
intent, LL shall deliver a copy of letter of
intent to Tenant, and Tenant shall have 5
business days to elect, via written notice to
LL, to lease said Offer Space at the same Base
Rent and upon same terms and conditions
contained in letter of intent.
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-If Tenant does not exercise, Tenant shall be
deemed to have waived its rights hereunder, and
LL shall be free to lease such space to such 3rd
party or any other party on substantially the
same terms as are set forth in letter of intent.
Cassiday, Schade & Gloor (11th and 12th Floors - 34,659 sq. ft.) (3/l/83 -
- --------------------------------------------------------------------------
2/28/98)
- --------
(T) Right of First Offer: Premises: (i) and space on 1Oth floor; and (ii)
10,996 sq. ft on 2nd floor per Exhibit B (see
attached). Such premises are collectively called
"Option Space".
Prior to leasing any Option Space to any other
tenant (other than tenants currently having any
rights with respect to such space), LL shall
offer such Option Space to Tenant, such offer to
be made in written notice specifying Base Rent
(current market rent) and the date on which such
Option Space would be made available to Tenant.
Tenant must exercise within 5 days at Base Rent
specified in LL notice. Space to be taken "as
is", with no tenant improvement allowance.
If not exercised, LL shall be free to lease such
Option Space to any other party on whatever
terms and conditions it deems appropriate.
Carnow, Conibear & Associates, Ltd. (14th Floor (9/15/85 - 12/31/03)
- --------------------------------------------------------------------
(T) Right of First
Refusal: In the event LL receives an executed letter of
intent or other memorandum of agreement from a
prospective tenant for any available space on
the 14th floor, LL shall deliver notice of such
prospective lease to Tenant offering Refusal
Space to Tenant upon same terms and conditions
as contained in such letter of intent. Tenant
shall have 10 business days to lease such
Refusal Space. If Tenant fails to respond within
IO business days, Tenant shall be deemed to have
waived its rights and LL shall be, subject to
Tenant's expansion options, free to lease such
Refusal Space.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- -------------------------------------------------------------
(T) Right of First
Refusal: Premises: 1,780 sq. ft. on 17th floor as
highlighted on Exhibit "A" to lease (see
attached) ("Option Space")
If at any time during Initial Term of lease, LL
shall receive an executed letter of intent from
any 3rd party containing specific terms to lease
the Option Space, and provided LL would be
willing to lease such space upon the terms set
forth in letter of intent, LL shall deliver
written notice of such letter of intent to
Tenant, and Tenant shall have 10 business days
to elect to lease such Option Space at the Base
Rent set forth below and at the terms and
conditions herein contained.
If Tenant exercises, LL shall deliver possession
to Tenant on 60th day following LL's receipt of
Tenant's notice electing to lease such Option
Space (the "Addition Date").
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If Tenant does not exercise, LL shall be free to
lease such Option Space to such 3rd party or any
other party. If LL and such third party
thereafter shall fail to enter a lease within
180 days or if LL thereafter elects to lease
Option Space to 3rd party on terms that are
materially different from those contained in
letter of intent, LL shall first offer Option
Space to Tenant pursuant to any such new terms
and Tenant shall again have the right to lease
such Option Space, upon IO business days notice
to LL. Base Rent for Option Space is dependent
upon the timing of the Addition Date and is to
be calculated as follows:
<TABLE>
<CAPTION>
Addition Date Between Rent/SF Total Rent Term
- ---------------------- ------- ---------- ----
<S> <C> <C> <C>
5/15/94 - 5/14/96 $1.00 $1,780.00 thru end of initial term
5/15/96 - 5/14/97 $2.00 $3,560.00 thru end of initial term
5/15/97 - 5/14/98 $3.00 $5,340.00 thru end of initial term
5/15/98 - 5/14/99 $4.00 $7,120.00 thru end of initial term
</TABLE>
Pro-rata share shall increase accordingly. Base
Rent for the Option Space shall be abated from
9/10/93 - 9/9/94, and space shall be taken "as
is".
Katz Randall & Weinberg (1700 & 1800) (11/l/95 - 4/30/08)
- ---------------------------------------------------------
(T) Right of First Offer: Provided Tenant is not in default and occupies
at least 80% of Premises for its own use and
subject to the rights of Facility Capital
Corporation on 1,780 sf on the 17th floor,
Tenant shall have a ROFO on all space that
becomes available on the 17th and 18th floor.
Prior to LL leasing any such space, LL shall
notify Tenant of the terms LL is offering.
Tenant shall have 14 business days to accept
under the terms outlined in the offer. If Tenant
does not accept or does not execute an amendment
within 20 days adding such space, LL is then
free to lease such space to third parties;
however, if terms are less favorable to LL by
more than 10%, Tenant must be offered those
terms. Tenant shall have 5 business days to
accept such revised terms.
Per Agreement dated 11/10/95, Tenant has waived
its ROFO as it relates to the lease with Rose &
Associates Office Group. In exchange for this
waiver, Rose agrees that, upon not less than 6
months notice from Tenant, Rose shall vacate its
premises and assign the Rose lease to Tenant.
The effective date of such assignment shall not
be prior to 11/ 1 /97, and LL's consent shall be
required.
Barack, Ferrazzano, Kirschbaum & Perlaman (27th and 28th Floors) (10/2/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Right of First Offer: If LL intends to lease any part of 28th floor
(the "Offering Space") to any other tenant, LL
must offer space to Tenant via written notice
specifying:
-base rent, escalation charges and other
material items, including concessions at which
LL would be willing to lease such space to
prospective tenants; and
-the date which such Offering Space will be made
available to Tenant.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
-Tenant shall have 10 business days to accept
space, at noted terms, by notice to LL in
writing. If Tenant accepts, such space becomes
part of the premises and is subject to paragraph
37 (Personal Liability of Tenant's Partners).
-If Tenant does not accept, LL shall be free to
lease Offering Space to any other party on
substantially same terms offered to Tenant,
provided that if LL does not certify to Tenant
that Offering Space has been leased to a third
party within 180 days, LL shall again be
obligated to offer such Offering Space to Tenant
Tenants waiver of rights to Offering Space shall
not affect Tenants Expansion Options.
Tenant's rights to leasing the Offering Space
subject to the following: (i) Offering Space
will be accepted by Tenant "as is", except for
allowances noted in LL notice; & (ii) During the
twelve (12) months after any Expansion Option
(See Tenants Right to Expand comments above) has
been waived, canceled or expired with respect to
such Offering Space, Tenant shall not have any
rights of first offer with respect to such
Offering Space unless such space is being
offered to a third party at terms more favorable
then available to Tenant under Tenant's
Expansion Options.
Ameritech Health Connections, Inc. (29th Floor) (6/l/93 - 5/31/00)
- ------------------------------------------------------------------
(T) Right of First
Refusal: Subject to the prior rights of the Federal Home
Loan Mortgage Company with regards to the space
on the 29th floor.
If LL enters into a letter of intent for space
on the 29th floor, LL shall notify Tenant of
such "Option Space" and all of the basic
business terms in said letter of intent. Tenant
has 10 business days to accept on such terms.
If Tenant does not exercise, or if LL and Tenant
do not enter into an amendment for such Option
Space within 14 days after Tenant exercises, LL
may lease said Option Space to any other party,
free of Tenant's rights hereunder.
Bain & Company, Inc. (30th Floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Right of First Offer: If at any time prior to the 84th month during
the term, LL decides to lease the Additional
Space with respect to space for which Tenant has
not yet exercised its Expansion Option, LL shall
notify Tenant. Tenant shall have 15 days to
notify LL that it will lease the entire
Additional Space set forth in LL's notice.
Tenant improvements shall be at the rates set
forth in Schedule 2 (see attached) for
Additional Space leased prior to the 60th month
of the term, and thereafter at the rate set
forth in LL's notice. If Tenant does not
exercise, Tenant shall have no further rights
and LL shall be free to lease such space
provided that if LL does not enter into a lease
for such Additional Space within I year after
Tenant's rejection or if such lease terminates
before the 84th month of the Term, such
Additional Space will again be subject to the
first offer rights.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
John Nuveen & Co., Incorporated (30th Floor) (TBD - 2/29/00)
- ------------------------------------------------------------
(T) Right of First Offer: At any time prior to 3/l/00, if LL commences
negotiations with a third party for leasing of
any portion of the 30th floor (other than space
subject to the rights of Bain & Company, Inc.)
LL must notify Tenant of location, size, Base
Rent and commencement date (not to be earlier
than 30 days after notice). Tenant shall have 10
days to accept space. If Tenant does not accept,
LL may rent such space to the third party. If LL
does not rent this space to such third party or
such third party term ends, the space shall
again become subject to Tenant's ROFO. Base Rent
shall be the then current market rental.
Page 5
<PAGE>
333 West Wacker Drive
Summary of Options to Renew
As of: August 15, 1997
MCI Metro Access Transmission Services, Inc. - (8/l/95 - 7/31/99)
- -----------------------------------------------------------------
(T) Option to Renew: Automatic renewal for two 4-year terms (8/l/99 -
7/31/03 & 8/l/03 7/31/07) with rent at the Fair
Telecommunications Market Rate.
Pepi Corporation d/b/a Alonti (Lobby) (11/1 5/95 - 11/30/05)
- -------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (12/l/05 - 11/30/10),
upon notice to LL by 11/30/04. Rent shall be
100% of market, but not less than the aggregate
Rent payable by Tenant for the last lease year
of the initial term.
Smith Mitchell Investment Group, Inc. (2nd Floor) (7/l/94 - 6/30/99)
- --------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew, upon notice to LL
between 1/l/98 - 8/31/98.
Rent shall be 100% of market. Tenant shall have
right to nullify its exercise of option by notice
to LL within IO business days of LL's market rent
notice to Tenant (which LL's notice shall be given
after Tenant's exercise of option but not later
than 6 months prior to commencement of renewal
period).
Sanchez and Daniels (Suite 500) (3/11/92 - 2/28/02)
- --------------------------------------------------
(T) Option to Renew: One 5-year option to renew (3/l/2002 - 2/28/2007),
with notice to LL not earlier than 15 months
(12/l/2000) or later than 12 months (3/l/2001).
Base Rent shall equal greater of (i) 95% of market;
and (ii) annual Base Rent payable by Tenant during
the last year of the Initial Term.
Tenant's notice that they wish to renew shall also
contain Tenant's determination of fair market
rental for such renewal period. Within 30 days
after receipt of Tenant notice, LL shall notify
Tenant that it either accepts Tenant's estimate of
Fair Market Rent or deliver LL's determination of
Fair Market Rent. If LL's estimate is not more than
110% of Tenant's estimate, Fair Market Rent shall
be the average of the two estimates. If the
difference is greater than 110%, LL and Tenant will
commence negotiations to determine Fair Market
Rent. If no agreement is reached within 30 days of
LL's estimate notice, Tenant may elect, by delivery
of notice to LL within said 30 day period, either
to (i) withdraw its exercise of renewal option; or
(ii) have Fair Market Rent determined via
appraisal.
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Forensic Technologies International, Inc. (Suite 600) (9/l/93 - 8/31/98)
- ------------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (9/l/1998 - 8/31/2003,
assuming 9/l/93 lease
(commencement date), with notice to LL by
12/1/1997. Rent shall equal 100% of market. LL to
notify Tenant of Base Rent during renewal term by
1/l/98. Tenant shall have right to nullify its
exercise of option by notice to LL within 30 days
of LL's notice to Tenant of rental terms.
Arbor Office Suites - 333 L.P. (7th floor) (4/l/85 - 3/31/02)
- -------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (4/l/2002 - 3/31/2007),
with 15 months notice to LL (1/l/2001). Base Rent
to equal 100% of market. LL to deliver certificate
identifying Base Rent (including escalation) during
renewal term, at least 10 months prior to
commencement of renewal term (6/l/2001).
Nyhan, Prister, Bambrick & Kinzie, P.C. (8th Floor) (2/l/92 - 1/31/02)
- ----------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (2/l/2002 - 1/31/2007
and 2/l/2007- 1/31/2012), with 12 months notice to
LL (2/1/2001 and 2/l/2006, respectively). LL to
deliver certificate specifying Base Rent at lease 7
months prior to commencement of renewal term
(7/l/2001 and 7/l/2006, respectively).
Base Rent shall be 90% of market for each renewal
term. In no event shall Base Rent for applicable
renewal term be less than Base Rent in effect
during last year of initial term or First Renewal
Term, as applicable.
If Tenant objects to Base Rent and LL and Tenant
cannot agree on same, Tenant may cancel its
election to renew in notice to LL given within 30
days of LL's notice specifying Base Rent.
Carnow, Conibear & Associates, Ltd. (14th Floor) (9/15/85 - 12/31/03)
- ---------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (1/l/04 - 12/31/08 and
1/l/09 - 12/31/13) upon notice to LL between
1/l/02 -12/31/02 and 1/l/07 - 12/31/07,
respectively. The Base Rent shall be 95 % of the
Fair Market Rental. Each renewal notice shall
contain Tenant's determination of the Fair Market
Rental. The Base Rent shall be 95 % of the Fair
Market Rental. LL shall have 30 days to accept
Tenant's determination of Fair Market Rental Rate
or deliver LL's determination of the Fair Market
Rental Rate. If LL's estimate exceeds Tenant's,
Tenant and LL shall negotiate the Fair Mark-et
Rental. If an agreement cannot be reached within 60
days from date of LL's estimate the rate shall be
determined per the appraisal process described in
the 1st Amendment.
Page 2
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Tetra Pak, Inc. (15th & 16th Floors) (9/l/91 - 8/31/01)
- -------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (9/l/2001 -
8/31/2006), with 14 months notice to LL
(7/l/2000). Base Rent shall equal 100% of
Market. LL to deliver certificate specifying
Base Rent during renewal term, at least 12
months prior to commencement of renewal term
(9/l/2000).
If Tenant objects to Base Rent specified by LL,
Tenant may cancel its election to renew via
notice to LL within 30 days of LL's notice to
Tenant specifying such Base Rent.
Grosvenor Capital Management, LP. (16th Floor) (3/l/93 - 5/31/99)
- -----------------------------------------------------------------
(T) Option to Renew: Two 3-year options to renew (6/l/1999 -5/31/2002
and 6/l/2002 - 5/31/2005), with 12 months notice
to LL (6/l/1998 and 6/l/2001, respectively). LL
to deliver certificate specifying Base Rent and
escalations (equal to 100% of market for each
renewal term) not later than 9 months prior to
end of then cur-rent term. If Tenant objects
with LL's determination of rent, and LL and
Tenant cannot agree on rental rate, Tenant shall
have the right to (i) cancel its exercise; or
(ii) elect to have rent determined by appraisal,
in written notice to LL not later than 30 days
after delivery of LL's notice specifying such
rent.
Hefter & Radke (Suite 1650) (4/15/89 - 2/28/01)
- -----------------------------------------------
(T) Option To Renew: One 5-year option to renew (3/l/01 -2/28/06)
upon notice to LL between 9/l/99 - 5/31/00. Base
Rent shall be 100% of Fair Market Rental.
Tenant's renewal notice shall contain Tenant's
determination of Fair Market Rental. Within 30
days after receipt of Tenant's renewal notice,
LL by notice to Tenant shall either accept
Tenant's estimate of Fair Market Rental or
deliver LL's determination of Fair Market
Rental. If LL's estimate exceeds Tenants, LL and
Tenant will commence negotiations to determine
Fair Market Rent. If not agreed upon within 30
days after delivery of LL's notice, the Fair
Market Rent, if Tenant elects by delivering
notice of such election within 5 days following
the negotiation period, shall be deter-mined by
appraisal.
Facility Capital Corporation (17th Floor) (9/10/93 - 5/14/99)
- -------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/15/99 - 5/14/04),
with notice to LL by 9/l/1998 (such notice shall
also contain Tenant's estimate of fair market
rent). LL shall notify Tenant by 9/21/98 that LL
either (i) accepts Tenant's rent estimate or
(ii) deliver LL's Fair Market Rent estimate.
Rent shall equal 100% of market.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If LL's estimate exceeds Tenant's estimate, LL
and Tenant will commence negotiations for fair
market rent. If no agreement has been reached
within 30 days after delivery of LL's estimate,
the fair market rent, if Tenant elects by notice
to LL within 5 days (after 30 day period), shall
be deter-mined by appraisal.
Katz Randall & Weinberg (1700 & 1800) (11/l/95 - 4/30/08)
- ---------------------------------------------------------
(T) Option to Renew: Provided Tenant occupies at least 80% of the rsf
for its own use, Tenant may renew for one 5-
year period (5/l/08 - 4/30/13) upon notice to LL
by 4/30/07. Rent shall be the greater of (i)
Base Rent payable in the last year of original
term (ii) or 95% of Market. LL shall deliver
notice of market within 45 days of Tenant's
notice , not to be later than 6/30/07.
Skadden, Arps, Slate, Meagher & Flom (19th & 20th Floors) (12/5/88 - 4/30/2000)
- -------------------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/l/2000 -
4/30/2005), with 18 months notice to LL
(10/31/98). LL to deliver certificate specifying
Base Rent (equal to 100% of market) within 60
days after receipt from Tenant of its election
to renew. Upon receipt of fair market rent
notice from LL, Tenant shall have (i) 90 days to
withdraw exercise of option; or (ii) 10 business
days to state what Tenant believes fair market
rent should be and request binding arbitration
of fair market rent.
Must be renewed in conjunction with renewal of
all spaces covered by Additional Leases (defined
as Sublease dated 5/l/85, as amended by First
Amendment of Sublease dated 6/30/88). Upon
renewal, all Additional Lease space shall be
deemed part of the premises hereunder.
National Equity Advisors, Inc. (Suite 2070) (1/l/95 - 12/31/99)
- ---------------------------------------------------------------
(T) Option to Renew: One 5-year period (1/l/00 - 12/31/04) upon
notice to LL 14 months prior to expiration
(10/31/98) . Base rent shall be equal to the
then current market rent as set forth in LL's
notice delivered to Tenant at least 13 months
prior to expiration (9/30/98). In the event
Tenant objects to the Base rent and LL and
Tenant cannot agree on the Base Rent, Tenant may
(i) cancel its election to extend the term (ii)
accept LL's determination of Base Rent or (iii)
submit Base rent to arbitration. Tenant shall
respond within 30 days of LL's notice, or be
deemed to have accepted LL's determination.
Federal Home Loan Mortgage corporation (25th Floor) (2/l/86 - 4/30/99)
- ----------------------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (5/l/1999 -
4/30/2004), with no earlier than 24 months
notice (5/l/1997) and no later than 12 months
notice (5/l/98) to LL. Base Rent shall be 100%
of market. LL to deliver certificate specifying
Base Rent during renewal term within 30 days of
Tenant's notice.
Page 4
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
If LL and Tenant cannot agree on Base Rent
within 30 days after LL's notice specifying such
Base Rent, Tenant shall have right, within 30
days after expiration of said 30 day period,
either (i) to withdraw its exercise of renewal
option; or (ii) require fair market rent to be
determined by appraisal.
Tenant may not exercise the renewal option in
regard to the 5th Amendment Expansion Space
only. However, Tenant may elect to exercise the
renewal option to the 25th floor solely or in
conjunction with the 5th Amendment Expansion
Space.
Barack, Ferrazzano. Kirschbaum & Perlaman (27th and 28th Floors) (10/2/88 -
- ---------------------------------------------------------------------------
6/30/03)
- --------
(T) Option to Renew: One 5-year option to renew (7/1/2003 -
6/30/2008), with notice to LL by 12/31/2001.
Base Rent shall be 100% of market, including
rental escalations. LL to deliver certificate
identifying Base Rent and any flat rate or
indexed escalation for the renewal term to
Tenant on or before 5/31/2002.
If Tenant objects to such rent, it may cancel
its option to renew via notice to LL by
6/30/2002. Notwithstanding the foregoing, Base
Rent due with respect to the 27th floor only,
for the first 3 months of the extended term,
shall be equal to the same rate as the Base Rent
with respect to the 27th floor during the last
month of the original term of lease.
Association of American Railroads (29th Floor) (1/25/88 - 10/31/97)
- -------------------------------------------------------------------
(T) Option to Renew: (Notification Date has elapsed) Subject to the
rights of John Nuveen & Co. and Ameritech Health
Connections. One 1 -year option to renew
(11/l/97 - 10/31/98) at market rent. Tenant
shall notify LL between 10/l/96 and 1/31/97 of
intent to renew. LL shall notify Tenant by
5/l/97 the Base Rent during the Renewal Period.
Tenant shall have ten (10) days thereafter to
nullify its exercise.
Ameritech Health Connections, Inc. (29th Floor) (6/l/93 - 5/31/00)
- ------------------------------------------------------------------
(T) Option to Renew: Two 3-year options to renew (6/l/2000 -5/31/2003
and 6/l/2003 5/31/2006, assuming a 6/l/93 start
date), with 9 months notice to LL (9/l/1999 and
9/l/2002, respectively). Base Rent shall be 100%
of market, including any increases thereto,
whether by CPI or other methods. LL to deliver
certificate indicating market terms within 45
days after receipt of Tenant notice. If LL and
Tenant can not agree on terms, Tenant may cancel
renewal election by notice to LL within 30 days
of receipt of terms from LL.
Page 5
<PAGE>
- --------------------------------------------------------------------------------
OPTIONS & ENCUMBRANCES
- --------------------------------------------------------------------------------
Bain & Company, Inc. (30th floor) (11/14/94 - 11/13/05)
- -------------------------------------------------------
(T) Option to Renew: One 5-year option to renew (11/14/05 -11/13/10),
upon 14 months notice to LL (i.e., by 9/13/03).
Base Rent shall be equal to 100% of market. LL
shall notify Tenant of Base Rent at least 12
months prior to commencement of renewal term.
Within 30 days, Tenant may accept rent, cancel
option to renew, or submit Base Rent to
arbitration.
Subject to the rights of John Nuveen Co., Inc.
with respect to the Premises (LL shall notify
Tenant by 10/l/04 if Nuveen exercises its rights
with respect to Premises). Expansion rights are
not applicable during renewal term.
John Nuveen & Co., Incorporated (30th-Floor) (TBD - 2129/00)
- ------------------------------------------------------------
(T) Option to Renew: The Renewal Option for Tenant's space on Floors
31 -36 shall not apply to the 30th floor space.
If Tenant exercises its first renewal option for
floors 31- 36, Tenant shall have the right to
lease the balance of the 30th floor other than
the Bain Space and the 30th floor Additional
Space. Tenant shall exercise such right at same
time it exercises its first renewal option
(i.e., by 11/30/98). If exercised, commencing
3/1/00, such expansion space shall become part
of the Premises in the same terms as determined
pursuant to the First Renewal Option.
John Nuveen & Co., incorporated (Floors 31 - 36) (3/l/85 - 2/29/2000)
- ---------------------------------------------------------------------
(T) Option to Renew: Two 5-year options to renew (3/l/2000 -2/28/2005
& 3/l/2005 - 2/28/2010), with 15 months notice
to LL (11/30/98 and 11/30/2003, respectively).
Base Rent shall be 100% of market as of the
commencement of each renewal term. LL to deliver
certificate specifying Base Rent at least one-
year prior to the commencement of each renewal
term (3/l/99 and 3/l/2004, respectively). If LL
and Tenant can not agree on terms, Tenant may
cancel renewal election by notice to LL within
30 days of receipt of notice from LL specifying
Base Rent.
Page 6
<PAGE>
Exhibit 10 (hhhh)
<PAGE>
THE OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
RETIREMENT PLAN
As Amended and Restated
Generally Effective January 1, 1997
<PAGE>
THE OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
RETIREMENT PLAN
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - DEFINITIONS 2
Section 1.1 Definition 2
Section 1.2 Construction 12
ARTICLE III - ELIGIBILITY FOR PARTICIPATION 14
Section 2.1 Eligibility Requirements 14
ARTICLE III - FUNDING 15
Section 3.1 Funding Method and Policy 15
Section 3.2 Establishment of Funding Standard Account 15
Section 3.3 Payment of Contributions 15
Section 3.4 Contributions by the Employers 15
Section 3.5 Permissible Contributions and Irrevocability 15
ARTICLE IV - ELIGIBILITY FOR BENEFITS 17
Section 4.1 Application for Benefits 17
Section 4.2 Normal Retirement Benefit 17
Section 4.3 Early Retirement Benefit 17
Section 4.4 Deferred Vested Benefit 18
Section 4.5 Disability Benefit 18
Section 4.6 Total and Permanent Disability 18
Section 4.7 Termination of Disability 19
ARTICLE V - AMOUNT AND PAYMENT OF BENEFITS 20
Section 5.1 Benefits Limited by Plan Provisions in Effect 20
Section 5.2 Benefit Amounts 20
Section 5.3 Qualified Joint and Survivor Benefit 21
Section 5.4 Disability Benefit 24
Section 5.5 Qualified Joint and Survivor (Husband and Wife)
Preretirement Survivor Benefit 25
Section 5.6 Coordination with Benefits Under UPS
Retirement Plan and UPS Pension Plan 26
Section 5.7 Determination of Present Value of Benefits 26
Section 5.8 Limitations Regarding Time of Payment of 32
Benefits
Section 5.9 Designation of Beneficiary 33
<PAGE>
Section 5.10 Final Payment to Participant or Beneficiary 33
Section 5.11 Suspension of Benefits 34
Section 5.12 Withholding of Income Tax 34
Section 5.13 Direct Rollover 36
ARTICLE VI - VESTING 38
Section 6.1 Vesting 38
Section 6.2 Breaks in Service for Vesting Purposes 38
Section 6.3 Forfeitures 38
ARTICLE VII - AMENDMENT, MODIFICATION AND TERMINATION; MERGER 39
Section 7.1 Right to Amend or Terminate 39
Section 7.2 Liquidation of Trust Fund 39
Section 7.3 Finality of Payment 40
Section 7.4 Non-Diversion of Assets 40
Section 7.5 Committee Functions During Termination 40
Section 7.6 Notice of Termination 40
Section 7.7 Merger and Consolidation of Plan, Transfer 40
of Assets
Section 7.8 Limitation on Benefits 41
ARTICLE VIII - INVESTMENTS 42
Section 8.1 Direction of Investments 42
Section 8.2 Annual Valuation of Trust Fund 42
ARTICLE IX - PLAN COMMITTEE 43
Section 9.1 Establishment of Plan Committee 43
Section 9.2 Delegation of Specific Responsibilities 43
Section 9.3 Power to Establish Regulations 43
Section 9.4 Claims Procedure 43
Section 9.5 Forfeiture in Case of Unlocatable 44
Participant or Beneficiary
Section 9.6 Liability of the Committee 45
Section 9.7 Fiduciary Responsibility Insurance; Bonding 45
Section 9.8 Meetings of Committee 45
Section 9.9 Compensation of Committee 45
Section 9.10 Books and Records 46
Section 9.11 Tables for Calculation 46
Section 9.12 Disbursements 46
Section 9.13 Allocation of Responsibility Among
Fiduciaries for Plan and Trust Administration 46
<PAGE>
ARTICLE X - GENERAL PROVISIONS 47
Section 10.1 Prohibition Against Attachment 47
Section 10.2 Facility of Payment 48
Section 10.3 Payment to Minor Beneficiary 48
Section 10.4 No Rights of Employment 48
Section 10.5 Payments Only From Trust Fund 49
Section 10.6 Applicable Law 49
Section 10.7 Titles 49
Section 10.8 No Access to Books and Records 49
Section 10.9 USERRA 49
ARTICLE XI - TOP-HEAVY PROVISIONS 50
Section 11.1 Definitions 50
Section 11.2 Top-Heavy Vesting Schedule 52
Section 11.3 Top-Heavy Minimum Benefit 52
Section 11.4 Top-Heavy Adjustment to Section 415 Limitations 53
Section 11.5 Certain Benefits Disregarded 53
<PAGE>
THE OVERSEAS PARTNERS LTD. AND SUBSIDIARIES
-------------------------------------------
RETIREMENT PLAN
---------------
THIS INDENTURE is made on the __________day of ___________1997, by Overseas
Partners Capital Corporation, a corporation duly organized and existing under
the laws of the State of Georgia (hereinafter called the "Company").
WITNESSETH:
-----------
WHEREAS, the Company established a tax-qualified retirement plan and trust,
effective January 1, 1995 (the "Plan"); and
WHEREAS, the Company now wishes to amend and restate the Plan in order to
include as employees who may become eligible to participate in the Plan certain
employees of Overseas Partners Ltd. , and to exclude from eligibility for
participation in the Plan certain other employees of specified subsidiaries of
the Company, to change the name of the Plan to The Overseas Partners Ltd. and
Subsidiaries Retirement Plan and to reflect recent changes in law and
regulations applicable to the Plan; and
WHEREAS, the Board of Directors of the Company has approved the amendment
and restatement of the Plan.
NOW, THEREFORE, the Company does hereby amend and restate the Plan
generally effective as of January 1, 1997, to read as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
Section 1. 1 Definitions. Whenever used herein, the following words shall have
-----------
the meaning set forth below unless otherwise clearly required by the context:
(a) "Accrued Benefit" means, for any Participant as of any date, the amount
-----------------
of benefit earned by such date, payable on a monthly basis as a single life
annuity beginning at the Participant's Normal Retirement Date (or immediately,
if the Participant has passed his Normal Retirement Date and is still an
Employee) calculated in accordance with Article V.
(b) "Actuarial Equivalent" means equality in value of the amounts
----------------------
expected to be received based upon and subject to subsection 5.7(b) and the
following subparagraphs (1) and (2), seven and one-half percent interest and the
GAM 83 mortality table (blended 50 percent male, blended 50 percent female).
(1) For purposes of determining the monthly amount of a
Participant's Qualified Joint and Survivor Benefit:
(A) If the normal form of the Participant's benefit is a single
life annuity with a guarantee of 120 monthly payments, the
Participant's Qualified Joint and Survivor Benefit shall be equal to
94 percent of the Participant's monthly benefit determined under
Section 5.2 increased (or decreased) by 0.5 percent for each year the
spouse's age is greater (or less) than the Participant's age, to a
minimum of 82 percent and a maximum of 99 percent.
(B) If the normal form of the Participant's benefit is a single
life annuity, the Participant's Qualified Joint and Survivor Benefit
shall be equal to 90 percent of the Participant's monthly benefit
determined under Section 5.2 increased (or decreased) by 0.5 percent
for each year the spouse's age is greater (or less) than the
Participant's age, with no minimum but to a maximum of 99 percent.
(2) The monthly amount of the Participant's single life benefit with a
guarantee of 120 monthly payments shall be 95 percent of his monthly
benefit payable in the normal form.
(c) Actuary means the individual actuary or firm of actuaries the
Committee selects to
provide actuarial services in connection with the administration of
the Plan.
(d) "Annuity Starting Date" means (1) the first day of the first period
-----------------
for which an amount is payable as an annuity, or (2) in the case of a
benefit not payable in
<PAGE>
the form of an annuity, the first day on which all events have occurred
which entitle the Participant to such benefit.
(e) "Benefit Service" means the number of a Participant's years and months
-----------------
of employment by an Employer as an Employee on or after the Effective Date.
A Participant's Benefit Service under this Section shall be added to his
UPS Benefit Service (see subsection 1. 1 (af)) to arrive at his total
Benefit Service for purposes of determining his Accrued Benefit. However,
a Participant shall not be credited with more than 12 months of Benefit
Service (including UPS Benefit Service) for any calendar year.
(1) Years and months of Benefit Service shall be determined based on
Hours of Service an Employee earned in accordance with the following
chart:
Hours of Service in Months of
Each Calendar Year Benefit Service
------------------ ---------------
Less Than 125 0 months
125 249 1 months
250 374 2 months
375 499 3 months
500 624 4 months
625 749 5 months
750 874 6 months
875 999 7 months
1000 1124 8 months
1125 1249 9 months
1250 1374 10 months
1375 1499 11 months
1500 over 12 months
(2) If a Participant with no vested interest, as determined under
Section 6. 1, incurs one or more consecutive Breaks in Service:
(A) Service credit before such Break in Service shall not be
taken into account for purposes of calculating years of
Benefit Service in accordance with this subsection until the
Participant completes one Year of Service after the Break in
Service; and
(B) Service credit prior to the Break in Service shall not be
taken into account for purposes of calculating years of Benefit
Service in accordance with this subsection if the number of
consecutive Breaks in Service equals or exceeds the greater of (i) the
aggregate number of the Participant's Years of Service
<PAGE>
(excluding Years of Service not required to be taken into account by
reason of any prior Breaks in Service), or (ii) five.
(f) "Board of Directors" means the Board of Directors of the Company.
--------------------
(g) "Break in Service" means a calendar year during which the Participant
------------------
both (i) fails to complete more than 124 Hours of Service with an Employer or a
Related Company, or (ii) fails to complete a sufficient number of hours of
service with UPS to avoid a one-year break in service under the terms of the UPS
Retirement Plan, as the Administration Committee of the UPS Retirement Plan or
its delegate for such purpose certifies to this Plan.
(h) "Code" means the Internal Revenue Code of 1986 as amended.
(i) "Committee" means the Committee of the Plan, the establishment and
-----------
responsibilities of which are set forth in Article IX, which is a named
fiduciary with respect to this Plan. The Committee shall be and is the Plan
Administrator and the agent for service of process with respect to the Plan.
(j) "Company" means Overseas Partners Capital Corporation ("OPCC ").
--------
(k) "compensation" means, generally, remuneration currently earned and
--------------
actually paid by an Employer to an Employee who is a Participant in the Plan
during his period of employment included in the calculation of Benefit Service,
including basic salary or wages, overtime pay, incentive and bonus pay. A
Participant's Compensation as described herein, together with his UPS
Compensation, if any (see subsection 1. 1 (ag), is used to determine his Final
Average Compensation. Compensation shall not include any other payments the
Participant receives, including, but not limited to, the following:
(1) Payments in the nature of compensation from an insurance carrier,
from a state unemployment or workmen's compensation fund, or from any
health and welfare or other similar benefit program or plan an Employer
maintains.
(2) Disability payments from an insurance carrier, a state disability
insurance fund, this Plan or any other disability plan an Employer
maintains.
(3) Expatriate supplements or other supplemental payments an Employer
makes to a Participant working outside his country of citizenship on
account of such foreign service.
(4) Payment or reimbursement by an Employer of relocation expenses a
Participant or his family incurs.
(5) The value of employee fringe benefits an Employer provides,
including but not limited to the payment of life insurance premiums,
whether or not the value of such fringe benefits is includable in an
Employee's taxable income.
<PAGE>
(6) Deferred compensation.
(7) Employer contributions to any pension, profit sharing or stock
bonus plan to which an Employer contributes or has contributed. However,
Compensation shall include that portion of a Participant's salary, wages or
bonus which the Participant has elected to defer to a cafeteria plan
described in Code Section 125 and to a cash or deferred arrangement or plan
described in Code Section 401(k) and which is not includable in the
participant's gross income by reason of Code Sections 125 or 402(g).
(8) Contributions to any Employer welfare plan.
(9) Payments realized from the exercise of a non-qualified stock
option granted to a Participant under any stock option plan an
Employer maintains.
(10) Amounts realized from the exercise of stock appreciation rights
under any plan an Employer maintains.
A Participant who is not performing duties for an Employer for any of the
reasons cited in the first sentence of subsection 1 - 1 (s) shall be deemed to
earn Compensation during such absence from employment or service at the annual
rate as was in effect for him or her immediately prior to the commencement of
his absence from employment or service.
For the purpose of calculating a Participant's Accrued Benefit with respect
to service with an Employer or UPS for any calendar year commencing on and
after January 1, 1989, in no event shall the Compensation (including for this
purpose LTPS Compensation) of any Participant taken into account under the Plan
exceed the following dollar amounts:
Plan Year Compensation Limit
--------- ------------------
1989 $200,000
1990 $209,200
1991 $222,220
1992 $228,860
1993 $235,840
1994 $150,000
1995 and later years $150,000
increased by th applicable cost-of-living
adjustment, if any, for the calendar year
sanctioned by Code Section 401(a)(17).
<PAGE>
In determining a Participant's Final Average Compensation, the $150,000
Compensation limitation shall apply retroactively with respect to Compensation
and UPS Compensation earned prior to 1994. However, a Participant's Accrued
Benefit shall not' be less than that which he had earned based on his UPS
Benefit Service and Final Average Compensation determined as of December 31,
1993.
Solely for the purpose of avoiding a double proration, within the meaning
of Department of Labor Regulation Section 2530.204-2(d), in calculating a
Participant's benefit under paragraph 5.2(a)(2), to the extent that a
Participant is credited with less than a full year's Benefit Service (including
for this purpose UPS Benefit Service) for a calendar year, then the
Participant's Compensation taken into account for such year shall be annualized
by dividing such Compensation by the number of months of Benefit Service the
Participant earned for such calendar year and multiplying the result by 12.
(1) "Early Retirement Date" means the first day of any calendar month
-----------------------
coincident with or next following the attainment of 55 years of age and the
completion of 10 Years of Service, but not later than Normal Retirement Date.
(m) "Effective Date" means January 1, 1995.
----------------
(n) "Employee" means an individual whom an Employer employs on or after
----------
the Effective Date, but shall not include a leased employee as that term is
defined in Code Section 414(n)(2) or an individual who is a nonresident alien
with no earned income (within the meaning of Code Section 91 1 (d) (2)) from an
Employer that constitutes income from sources within the United States (within
the meaning of Code Section 861(a)(3)).
(o) "Employer" means, individually, the Company, Overseas Partners Ltd.
----------
and each Related Company that has adopted the Plan.
(P) "ERISA" means Public Law No. 93-406, the Employee Retirement Income
-------
Security Act of 1974, as amended from time to time.
(q) "Final Average compensation", with respect to an Employee who is a
----------------------------
Participant, means his average annual Compensation (including for this
purpose UPS Compensation) for the highest consecutive five out of the 10
calendar years preceding the calendar year in which:
(1) the Participant terminated his employment as an Employee with
an Employer,
(2) the Participant died, if the pre-retirement spouse benefit
becomes payable to his surviving eligible spouse,
<PAGE>
(3) the Plan terminated, whether in whole or in part.
Notwithstanding the foregoing, if the Participant received Compensation as
an Employee for the entire calendar year in which his termination of employment
occurred, his Compensation for such calendar year shall be included in the
calculation of his Final Average compensation if it is to his advantage to do
so. If the Participant, under the rules described above, has Compensation or
UPS Compensation during fewer than five full calendar years, his Final Average
Compensation shall be his annual average Compensation (including for this
purpose UPS Compensation) for the entire period during which he earned Benefit
Service or UPS Benefit Service in accordance with this Plan. However, in no
event shall a Participant's Final Average Compensation include Compensation paid
in the form of a disability benefit described in this Plan, or benefits under a
long-term disability plan or program an Employer sponsors or to which an
Employer contributes.
(r) "Highly Compensated Employee" means effective January 1, 1997,an
-----------------------------
Employee who (1) during the current or preceding Plan Year was an owner of more
than five percent of the Employer or a Related Company; or (2) for the preceding
Plan Year received annual Compensation in excess of $80,000, as adjusted by the
Secretary of the Treasury and, if the Employer elects, who was in the group
consisting of the most highly compensated 20 percent of Employees.
For purposes of this subsection (r), Employees who are non-resident aliens
and who receive no earned income from the Employer or a Related Company from
sources within the United States shall be excluded, and for purposes of
determining whether an Employee was in the group consisting of the most highly
compensated 20 percent of Employees under this subsection (r), the following
shall be excluded:
(1) Employees who have not completed six months of service,
(2) Employees who normally work less than 17-1/2 hours per week,
(3) Employees who normally work during not more than six months
during any Plan Year,
(4) Employees who have not attained age 21, and
(5) Employees who are included in a unit of employees covered by an
agreement that the Secretary of Labor finds to be a collective
bargaining agreement between employee representatives and the Employer
or a Related Company, provided 90 percent or more of the Employees are
covered under collective bargaining agreements and the Plan only
covers Employees who are not covered under the collective bargaining
agreements.
<PAGE>
For purposes of this subsection (r), a former Employee shall be treated as
a Highly Compensated Employee if (1) he was a Highly Compensated Employee at the
time he terminated employment with the Employer or a Related Company or (2) the
former Employee was a Highly Compensated Employee at any time after he attained
age 55.
For purposes of this subsection, Compensation shall include amounts that a
Related Company pays and shall be determined without regard to the $150,000
limitation, as adjusted.
(s) "Hour of Service" means each hour for which an employee is paid or
-----------------
entitled to be paid for the performance of duties for an Employer or a Related
Company; each, hour for which an employee is paid or entitled to be paid by an
Employer or a Related Company for periods during which no duties are performed
due to vacation, holiday, illness, short-term disability or incapacity pursuant
to which payments are received in the form of salary continuation or from a
short-term disability plan or workmen's compensation plan the Employer or a
Related Company sponsors or to which the Employer or a Related Company
contributes, layoff, jury duty, military duty which gives rise to reemployment
rights under Federal law, or paid leave of absence (including a period where an
employee remains on salary continuation during a period of illness or
incapacity); and each hour for which back pay is awarded or agreed to by an
Employer or Related Company if not already credited under this sentence.
Notwithstanding any of the foregoing, and except as provided in the next
succeeding sentence, no more than 750 Hours of Service will be credited to a
Participant for any single continuous period during which the Employee performs
no duties; and no credit shall be given for a payment which solely reimburses an
Employee for medical or medically-related expenses the Employee incurs. Any
single continuous period during which he performs no duties for reason of
absence for military duty or other leaves of absence that the board of directors
of an Employer or Related Company employing the Employee approves shall be
credited to the Employee without regard to the limitation on the crediting of no
more than 750 Hours of Service as described above. A payment shall be deemed to
be made by or due from an Employer or Related Company whether made by or due
from said Employer or Related Company directly or indirectly --through a trust
fund, insurer or other entity to which the Employer or Related Company
contributes or pays premiums, regardless of whether such contributions are for
the benefit of particular employees or are on behalf of a group of employees in
the aggregate. Stated generally, Hours of Service credited to an Employee
during a period of absence as defined above shall be credited at the same rate
at which the Employee would have normally been credited with Hours of Service
but for the absence; provided however, that the crediting of Hours of
<PAGE>
Service for each calendar month in which said Employee would, under the rules
described above, have earned at least one Hour of Service.
(t) "Normal Retirement Date " means the first day of the calendar month
-------------------------
coincident with or next following the later to occur of (1) the Participant's
attainment of age 65 or (2) the Participant's earning of five Years of Service
or, if earlier, the fifth anniversary of his participation in this Plan.
(u) "Participant" means an Employee who has satisfied the eligibility
-------------
requirements of Article II hereof.
(v) "Permitted Leave" means any leave of absence not in excess of two
-----------------
years, with or without compensation, that an Employer approves.
(w) "Plan" means the Overseas Partners Ltd. and Subsidiaries Retirement
------
Plan as set forth herein, as the same may hereafter be amended from time to time
by written resolution of the Board of Directors.
(x) "Plan Year" means the calendar year.
-----------
(Y) "Postponed Retirement Date" means the first day of the calendar month
---------------------------
coincident with or next following a Participant's actual retirement, when that
retirement is later than his Normal Retirement Date.
(z) "Related Company" means (1) any other corporation (domestic or
-----------------
foreign) on and after the date that it, together with any Employer, is a member
of a controlled group of corporations as described in Code Section 414(b); (2)
any other trade or business (whether or not incorporated) on and after the date
that it and any Employer are under common control as described in Code Section
414(c); and (3) any organization (whether or not incorporated) on and after the
date that it, together with any Employer, is a member of an affiliated service
group as described in Code Section 414(m).
(aa) "Social Security Amount", with respect to an Employee who is a
------------------------
Participant, means the yearly Primary Old Age Insurance benefit which a
Participant is eligible or may become eligible to receive at the age at which
unreduced Primary Old Age Insurance benefits commence (whether or not the
Participant made such application) under the provisions of the Federal Social
Security Act (as it is in effect on his Normal Retirement Date or earlier
termination of employment with an Employer or Related Company), which amount the
Committee shall determine under rules it adopts based upon:
(1) the assumption that the Participant has made or will make
proper and timely application for such benefit;
<PAGE>
(2) if a Participant documents his Compensation history to the Committee,
such history, provided, however, that for such history to be used in
lieu of the estimated amount determined under subparagraphs (3) and (4)
below, the Participant must supply such history to the Committee no
later than one year following the later of (i) the Participant's
separation from service or (ii) the time when the Participant is
notified of the benefit to which he is entitled;
(3) subject to subparagraph (2) above, an estimated preparation or
preretirement Compensation history with respect to the Participant; and
(4) subject to paragraph (2), above, with respect to a Participant whose
employment terminated for reason of retirement or otherwise prior to
his Normal Retirement Date, on the assumption that the Participant
continued in employment with the Employer to his Normal Retirement
Date at the rate of compensation as in effect on his earlier date or
retirement or termination of employment.
In determining a Participant's Social Security Amount based upon such
Participant's Compensation history pursuant to subparagraphs (2), (3) and (4)
above, the value of deferred compensation shall be disregarded, except that
elective contributions (1) under a qualified cash or deferred arrangement
described in Code Section 401(k), or (2) to a tax sheltered annuity described in
Code Section 403(b), if any, may be considered as part of such Compensation
history.
(ab) "Trust Agreement" means the trust agreement establishing the Overseas
-----------------
Partners Capital Corp. Retirement Plan Trust, effective as of January 1, 1995,
including any future amendments thereof, which forms a part of this Plan.
(ac) "Trust" or "Trust Fund" means all of the assets of the Plan that the
------- ------------
Trustee holds for the purposes of the Plan.
(ad) "Trustee" means the corporations or individuals that the Board of
---------
Directors designates to hold assets of the Plan for the purposes of the Plan.
(ae) "UPS" means United Parcel Service of America, Inc. and any subsidiary
or affiliate thereof which is an "Employer Company" as defined in the UPS
Retirement Plan.
(af) "UPS Benefit Service" means the number of years and partial years of
---------------------
"Benefit Service" for benefit accrual purposes credited with respect to a
Participant in accordance with Section 1. 1 (1) of the UPS Retirement Plan or
any successor provision, on account of a Participant's service with UPS which
precedes the Participant's employment with an Employer. If a Participant
separates from service with an Employer and is thereafter employed by UPS, UPS
Benefit Service, if any, with respect to such period of UPS employment shall be
taken into account for purposes of this Plan only if
<PAGE>
the Participant thereafter returns to employment with an Employer and earns at
least one Hour of Service as an Employee. UPS Benefit Service credited under
this Plan with respect to a Participant shall be in such amount as the
Administrative Committee of the UPS Retirement Plan or its delegate certifies to
this Plan for this purpose.
(ag) "UPS compensation" means remuneration a Participant earns on
------------------
account of his service with UPS which precedes the Participant's employment with
an Employer, which is taken into account for purposes of the UPS Retirement Plan
as "Compensation" within the meaning of subsection 1.1(y) of the UPS Retirement
Plan or any successor provision, and which the Administrative Committee of the
UPS Retirement Plan or its delegate certifies to this Plan for such purpose. If
a Participant separates from employment with an Employer and is thereafter
employed by UPS, UPS Compensation, if any, with respect to such period of UPS
employment shall be taken into account for purposes of this Plan only if the
Participant thereafter returns to employment with an Employer and earns at least
one Hour of Service as an Employee.
(ah) "UPS Vesting Service" means the number of "Years of Service" for
---------------------
vesting purposes credited with respect to a Participant in accordance with
Sections 1. 1 (m) and Article VI of the UPS Retirement Plan or any successor
provisions on account of the Participant's service with UPS which precedes or
follows the Participant's employment with an Employer. UPS Vesting Service
credited under this Plan with respect to a Participant shall be in such amount
as the Administrative Committee of the UPS Retirement Plan or its delegate
certifies to this Plan for this purpose.
(ai) "Year of Service" means, with respect to each Participant with at
-----------------
least one Hour of Service as an Employee, (i) each calendar year in which he
completes not less than 750 Hours of Service with an Employer and (ii) each year
of UPS Vesting Service; provided, however, that a Participant shall not be
credited with more than one Year of Service with respect to any calendar year.
Section 1.2 Construction. Where required words used in the masculine
------------
gender shall include the feminine gender. Words used in the singular or plural
shall be construed as if plural or singular, respectively, where they would so
apply.
<PAGE>
ARTICLE II
----------
ELIGIBILITY FOR PARTICIPATION
-----------------------------
Section 2.1 Eligibility Requirements. Any Employee who, as of the
------------------------
Effective Date, had been employed within the preceding one month by UPS and had
satisfied the eligibility requirements for participation in the UPS Retirement
Plan, shall become a Participant in this Plan as of the Effective Date. Any
individual who, after the Effective Date, becomes an Employee following a period
of employment with UPS, ending not more than one month prior to his date of hire
by the Employer, during which he had satisfied the eligibility requirements for
participation in the UPS Retirement Plan, shall become a Participant in this
Plan as of the first day of the calendar month following his date of hire as an
Employee.
The participation of any other Employee eligible to become a Participant
shall commence as of the first day of the calendar month following the date as
of which he has both attained age 21 and completed a 12-month period of
employment, measured from his date of hire by an Employer or the beginning of
any subsequent Plan Year, during which he earned not less than 750 Hours of
Service. If such an Employee had been employed by UPS within the one month
preceding his date of hire by an Employer, he shall become a Participant in this
Plan as of the first day of the calendar month following the date as of which he
has both attained age 21 and completed a 12 month period of employment with UPS
and such Employer, ending not later than the first anniversary of his date of
hire by an Employer, during which he earned 750 or more Hours of Service,
counting for this purpose hours of service earned at UPS (as UPS certifies to
this Plan), as well as Hours of Service under this Plan. An Employee initially
employed by Overseas Partners LTD after January 1, 1997, who otherwise qualifies
shall become a Participant in this Plan only as and when the Committee
specifies. An Employee of Overseas Management, Inc. or any other Related
Company shall become a Participant in the Plan only as and when the Committee
specifies.
Any person who leaves an Employer's service after becoming eligible to
participate shall again become a Participant in this Plan immediately upon his
return to the Employer's service, unless he has no vested right under the Plan
and the number of his consecutive Breaks in Service equals or exceeds the
greater of (i) the aggregate number of his prior Years of Service (excluding
Years of Service not required to be taken into account by reason of any prior
Breaks in service), or (ii) five. If the condition of clause (i) or clause
(ii), as applicable, is satisfied, the Employee will be treated as a new
Employee for purposes of this Section 2.1.
<PAGE>
ARTTCLE III
-----------
FUNDING
-------
Section 3.1 Funding Method and Policy. Each Employer shall contribute to
-------------------------
the Plan with respect to each Plan Year an amount sufficient to satisfy its
obligations hereunder and the minimum funding standard, which shall be
considered met if at the end of each Plan Year, the Plan insofar as it relates
to the Employer does not have an accumulated funding deficiency, as defined in
Section 302 of ERISA. Additional amounts may be contributed in the Employer's
discretion. The funding method shall be contributions from each Employer and
the fund' g policy shall be such as is consistent with the objectives of the
Plan.
Section 3.2 Establishment of Funding Standard Account. The Committee
-----------------------------------------
hereby establishes a funding standard account which shall be maintained in
accordance with Section 302 of ERISA and Code Section 412. Each Employer shall
contribute to the plan with respect to each Plan Year an amount sufficient to
prevent the occurrence of an accumulated funding deficiency. The Committee
shall notify each Employer of the existence of an accumulated funding.
deficiency but failure to so notify an Employer shall not relieve the Employer
from its obligations hereunder. The Committee shall take whatever action is
appropriate to prevent an accumulated funding deficiency, including making
application for a variance from the minimum funding standard or an extension of
amortization periods or establishing an alternative minimum funding standard in
accordance with Sections 303, 304 and 305 of ERISA and Code Section 412.
Section 3.3 Payment of Contributions. Each Employer may pay its
------------------------
contribution for any Plan Year on any date or dates, provided, however, that the
total amount of an Employer's contribution for any Plan Year shall be paid in
full not later than the last day for timely filing of its Federal income tax
return for the year with respect to which the contribution is made, including
extensions thereof the Internal Revenue Service grants. In determining when to
make its contributions as aforesaid, the Employer shall comply with the
quarterly contribution rules described in Code Section 412(m).
Section 3.4 Contributions by the Employers. All contributions to this
------------------------------
plan to fund the benefits described in Article IV shall be made only by the
Employers.
Section 3.5 Permissible Contributions and Irrevocability. Any amounts
--------------------------------------------
an Employer contributes pursuant to this Article III may be in cash or other
property. In no such event and under no circumstances shall such contributions,
or any part thereof, revert to or be recoverable by an Employer until all
obligations under this Plan have been fully satisfied as provided in Section
7.4, except as follows:
(a) in the case of a contribution, or any part thereof, made under a
mistake of fact, the Employer may recover such contribution within one
year of payment;
<PAGE>
(b) in the case of contribution conditioned on the initial qualification of
the Plan and Trust under the Code, if the Plan and Trust receive an
adverse determination from the Internal Revenue Service regarding such
initial qualification, the Employer may recover such contribution as
adjusted for gains, earnings and losses within one year after such
determination; and
(c) because all contributions are conditioned on deductibility, in the
event that an Employer cannot deduct a contribution pursuant to Code
Section 404, the Employer may recover such contribution, to the extent
disallowed, within one year after the disallowance of the deduction.
The amount which may be returned to the Employer is the excess of: (a) the
amount the Employer contributed over (b) the amount that the Employer would have
contributed had a mistake of fact or a mistake in determining the deduction not
occurred. Earnings attributable to the excess contribution may not be returned
to the Employer, but losses attributable thereto must reduce the amount to be
returned.
<PAGE>
ARTICLE IV
----------
ELIGIBILITY FOR BENEFITS
------------------------
Section 4.1 Application for Benefits. Each Participant or former
-------------------------
Participant shall make written application to the Committee, or its designated
representative, for benefits under this Plan at -least 60 days, but not more
than 90 days, prior to the first day of the month on which the benefits applied
for are to be paid, on forms the Committee provides for this purpose. The
Committee may require each applicant for benefits to submit such information as
may reasonably be required for the proper administration of the Plan. Except
for good cause shown, or unless the delay is due to the failure of the Committee
to furnish the necessary information to the Participant or former Participant at
his last known address as indicated on the Employer's records, failure to submit
such an application within the time prescribed shall result in the removal of
any obligation to pay any benefits that would have been payable, had the
application been timely filed, prior to the date on which such an application is
delivered to the Committee. The falsity of any statement material to an
application or the furnishing of fraudulent information or proof shall be
sufficient reason for the recapture, by means of suspension or discontinuance of
benefits, or otherwise, of any excess benefits, if any, paid under this Plan.
Section 4.2 Normal Retirement Benefit. Each Participant who has attained
-------------------------
his Normal Retirement Date may retire from the service of an Employer and upon
so retiring shall be paid a pension in an amount determined under Article V.
Payment of such a pension shall commence:
(a) In the case of a Participant who retires on his Normal Retirement Date, on
that date, and
(b) In the case of a Participant who retires later than his Normal Retirement
Date, on his Postponed Retirement Date.
Notwithstanding the foregoing, no Normal Retirement Benefit as defined in
this Section shall be paid to a Participant during such period of time as he is
receiving benefits under a short term or long-term disability plan or similar
program the Employer sponsors or to which the Employer contributes.
Section 4.3 Early Retirement Benefit. A Participant who attains his Early
------------------------
Retirement Date while in the active employ of an Employer, and who retires at
any time thereafter, prior to his Normal Retirement Date from both the Employer
and UPS, may elect to receive an Early Retirement Benefit as defined in this
Section in an amount determined under Article V, commencing on the first day of
any month following his retirement (but not later dm his Normal Retirement
Date), provided he has complied with the provisions of Section 4.1.
Notwithstanding the foregoing, no Early Retirement Benefit described in this
Section shall be paid to a Participant during such period of time as he is
receiving benefits under a short-term or long-term disability plan or similar
program the Employer sponsors or to which the Employer contributes.
<PAGE>
Section 4.4 Deferred Vested Benefit. A Participant who has five or more
-----------------------
Years of Service will be eligible for a Deferred Vested Benefit if (i) his
employment is terminated other' than by reason of death before the earliest date
on which he would be eligible for retirement under the terms of Sections 4.2 or
4.3, and (ii) he does not later reenter the service of an Employer or UPS.
Said benefit shall commence on the first day of any month after his Early
Retirement Date, but no later than his Normal Retirement Date, provided he has
complied with the provisions of Section 4.1. The amount of such benefit shall
be determined under Article V.
Section 4.5 Disability Benefit.
------------------
(a) In the event that employment of a Participant is terminated as defined
in this Section in an amount by reason of his total and permanent disability
after completion of 10 or more Years of Service, he shall be entitled to receive
a Disability Benefit as defined in this Section in an amount determined under
Article V, provided that he (i) has not yet attained his Early Retirement Date
and (ii) is not receiving benefits under a short term or long-term disability
plan or similar program the Employer sponsors or to which the Employer
contributes. If the Participant, after completion of 10 or more Years of
Service, has attained his Early Retirement Date or Normal Retirement Date when
he becomes disabled, he will be eligible to receive an Early Retirement Benefit
or a Normal Retirement Benefit instead of a Disability Benefit, the amount of
such Early Retirement Benefit or Normal Retirement Benefit to be calculated in
accordance with Article V. Notwithstanding the foregoing, no Disability Benefit
shall be paid under this Plan to a Participant who is receiving benefits under
any short-term or long-term disability plan or similar program the Employer
sponsors or to which the Employer contributes.
(b) Provided he has complied with the provision of Section 4. 1, payment of
the monthly Disability Benefit shall begin with the first calendar month
following the later of: (i) the month in which the Committee makes its
determination of disability of the Participant; and (ii) the month in which the
Participant's employment with an Employer terminates. The benefit shall
continue to be paid for the period of time set forth in Section 5.4.
Section 4.6 Total and Permanent Disability. A Participant shall be
------------------------------
considered totally and permanently disabled hereunder if he is unable to engage
in any substantial gainful activity for an Employer by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long-continued and indefinite duration, and it is not the
result of military service or the commission of a crime by the Participant. The
Committee may require such proof of disability as will be satisfactory to it,
and may withhold payments until such proof is provided.
<PAGE>
Section 4.7 Termination of Disability. If a Participant receiving a
-------------------------
Disability Benefit shall subsequently cease to be totally and permanently
disabled, his Disability Benefit shall cease, and he may, if he meets the
eligibility requirement, apply for a Normal or Early Retirement Benefit. If the
Participant's application is approved, payments under either of these pensions
shall commence as of the first day of the month following the termination of the
Disability Benefit. The Committee shall determine, in its sole discretion,
whether a Participant has ceased to be permanently and totally disabled.
<PAGE>
ARTICLE V
---------
AMOUNT AND PAYMENT OF BENEFITS
------------------------------
Section 5.1 Benefits Limited by Plan Provisions in Effect.
---------------------------------------------
(a) The benefit to which a Participant under this Plan is entitled,
subject to subsection (b), shall be determined by the provisions of the Plan
which were in effect on the date the Participant last earned an Hour of Service
with an Employer. No amendment made to the Plan after such date shall affect the
entitlement of a Participant to any benefit hereunder, unless the amendment
specifically provides to the contrary.
(b) In determining a Participant's Accrued Benefit under this Plan, his
UPS Benefit Service, UPS Vesting Service and UPS Compensation shall be
calculated in accordance with the terms of the UPS Retirement Plan in effect on
the date the Participant last earned an Hour of Service under this Plan or the
UPS Retirement Plan prior to his Annuity Starting Date.
Section 5.2 Benefit Amounts. Subject to the limitations set forth in this
---------------
Article V, the amount of the monthly benefit payable to a Participant in form of
a single life annuity shall be the following amount:
(a) Normal Retirement Benefit. For a Participant who retires on or
-------------------------
after his Normal Retirement Date, the larger of the benefit described in
paragraph 5.2(a)(1) or paragraph 5.2(a)(2) below:
(1) 1/12th of 50 percent of a Participant's Final Average Compensation
less 1/12th of 50 percent of his Social Security Amount where a Participant has
30 or more years of Benefit Service and UPS Benefit Service. If a Participant
has less than 30 years of Benefit Service and UPS Benefit Service at his Annuity
Starting Date, his monthly benefit will be the amount calculated above
multiplied by a fraction, the numerator of which is the number of years of
Benefit Service and UPS Benefit Service to his Annuity Starting Date, and the
denominator of which is 30. However, in no event shall the monthly benefit
determined above be less than the highest retirement benefit that could have
been payable to the Participant on an Early Retirement Date (adjusted for any
increases since such Early Retirement Date in the Primary Old Age Insurance
Benefit under the Federal Social Security Act).
(2) The sum of:
(i) 1/12th of two percent of the Participant's Final Average
Compensation up to $48,000, multiplied by his years of Benefit Service and UPS
Benefit Service to a maximum of 30; plus
<PAGE>
(ii) one-half of one percent of the Participant's Final Average
Compensation in excess of $48,000, multiplied by his years of Benefit Service
and UPS Benefit Service to a maximum of 30.
(b) Early Retirement Benefit. The amount of the Early Retirement
------------------------
Benefit payable to such Participant shall be an amount equal to the benefit
determined under paragraphs (1) or (2) of subsection 5.2(a) above, whichever is
the larger amount, reduced by one-quarter of one percent for each month,
including a partial month, by which the Participant's Annuity Starting Date
precedes his 65th birthday. Notwithstanding the foregoing, if the Participant
has earned, as of his Annuity Starting Date, at least 25 years of Benefit
Service and UPS Benefit Service:
(1) The reduction described above shall apply to his benefit determined
under paragraph (1) of subsection 5.2(a) only with respect to each month,
including a partial month, by which the Participant's Annuity Starting Date
precedes his 60th birthday; and
(2) The reduction described above shall not apply to his benefit
determined under paragraph (2) of subsection 5.2(a).
(c) Deferred Vested Benefit. The amount of the Deferred Vested Benefit
-----------------------
payable to a Participant shall be equal to the benefit determined under
paragraphs (1) or (2) of subsection 5.2(a), above, whichever produces the larger
amount, reduced by one-half of one percent for each month, including a partial
month, by which the Participant's Annuity Starting Date precedes his 65th
birthday.
Section 5.3 Qualified Joint and Survivor Benefit.
-------------------------------------
(a) Payment of Benefit in Form of Qualified Joint and Survivor Benefit.
------------------------------------------------------------------
(1) If on the Annuity Starting Date of a Participant's Normal or Early
Retirement Benefit or Deferred Vested Benefit the Participant is married, such
benefit shall be paid in the form of a Qualified Joint and Survivor Benefit
unless an election under subsection 5.3(b) is in effect. The benefit under the
Qualified Joint and Survivor Benefit shall be the Actuarial Equivalent of the
Participant's benefit as determined under this Article V and payable in the form
of a single life annuity.
Under the Qualified Joint and Survivor Benefit, a monthly benefit shall be
paid to the Participant for his lifetime, and his spouse, as of the Annuity
Starting Date, if surviving at the Participant's death, shall be entitled to
receive thereafter a lifetime survivorship benefit in a monthly amount equal to
50 percent of the monthly amount which had been payable to the Participant. The
last payment of the Qualified Joint and Survivor Benefit shall be made as of the
first day of the
<PAGE>
month in which the death of the latter to die of the Participant and his
spouse has occurred.
(2) If the Participant is not married on the Annuity Starting Date, he
shall receive the monthly benefit determined under Section 5.2 and payable in
the form of a single life annuity, the last payment of which shall be made as of
the first day of the month in which the Participant's death occurs.
Notwithstanding the preceding sentence, a Participant may, within the 90-day
period ending on the Annuity Starting Date, elect to receive a reduced monthly
benefit payable in the form of a single life annuity with a guarantee of 120
monthly payments. Such monthly payment shall be the Actuarial Equivalent of the
Participant's monthly benefit payable in the form of a single life annuity.
Under this option, if the Participant dies after the Annuity Starting Date but
before receiving 120 monthly payments, the monthly payments shall be paid to the
Participant's beneficiary, designated in accordance with Section 5.9, until the
Participant and his beneficiary have received a total of 120 monthly payments.
(b) Election out of Qualified Joint and Survivor Benefit. In lieu of
----------------------------------------------------
the Qualified Joint and Survivor Benefit, a Participant may elect, at any time
within the 90 day period ending on the Annuity Starting Date, to waive such
benefit in favor of a monthly benefit payable in the form of (i) a single life
annuity or (ii) a single life annuity with a guarantee of 120 monthly payments
(as described in paragraph 5.3(a)(2)).
(1) Form of Election. An election by a Participant under this
----------------
subsection (b) must be in writing in a form the Committee approves, and shall
not be effective unless:
(A) the spouse of the Participant consents to the election, and such
consent (i) is in writing, (ii) acknowledges the Participant's selection of an
alternate form of benefit and/or survivor beneficiary, which may not thereafter
be changed without spousal consent unless the spouse's prior consent expressly
permits the Participant to change the survivor beneficiary without further
consent by the spouse, (iii) acknowledges the effect of such election, and (iv)
is witnessed by a notary public; or
(B) it is established to the satisfaction of a representative of the
Plan that the spouse's consent cannot be obtained because (i) the Participant
has no spouse, (ii) the Participant's spouse cannot be located, or (iii) one of
the conditions prescribed in Treasury regulations is satisfied.
(2) Revocation of Election. A Participant may revoke an election made under
----------------------
this subsection (b) at any time prior to the Annuity Starting Date.
<PAGE>
(c) Notice Requirements.
-------------------
(1) No less than 30 days and no more than 90 days prior to the
Participant's Annuity Starting Date, the Committee shall provide the Participant
with a written explanation of:
(A) the terms and conditions of the Qualified Joint and Survivor Benefit;
(B) the Participant's right to make, and the effect of, an election to waive
the Qualified Joint and Survivor Benefit;
(C) the requirement that the Participant's spouse consent in writing to
the election in accordance with the spousal consent provisions set forth in
subsection (b); and
(D) the right to make, and the effect of, a revocation of an election not to
receive a Qualified Joint and Survivor Benefit.
(2) A payment may commence at any time following seven days after the
day the Committee provides the explanation described in paragraph (c) (1),
provided that:
(A) the Committee informs the Participant that the Participant has at
least 30 days after receiving the explanation to consider the optional forms of
payment and the Participant elects payment,
(B) if the Participant is married, there is applicable spousal consent, and
(C) the Committee permits the Participant to revoke the election the
Participant makes under paragraph (2)(A) any time prior to the expiration of the
seven-day period.
(d) Cash-Out of Benefits. Notwithstanding any other provisions of this
--------------------
Plan, if following a Participant's termination of employment the present value
of his vested Normal Retirement Benefit or Deferred Vested Benefit does not
exceed $3,500, the Committee shall, in lieu of such benefit, pay to the
Participant, without his consent, such present value in a lump sum. The present
value of the Participant's benefit for this purpose shall be determined by using
the interest rate and mortality table indicated in subsection 5.7(b). In the
case of a Participant who terminates employment prior to earning a vested
benefit hereunder, said benefit shall be deemed to be distributed immediately
following such termination of employment. In the event the Participant is
<PAGE>
reemployed, his Benefit Service with respect thereto may be restored in
accordance with the rules set forth at subsection 5.3(e).
(e) Repayment of Cash-Out. After a distribution described in subsection
---------------------
5.3(d), the Participant's Benefit Service (including, if applicable, UPS Benefit
Service) with respect to which the distribution was made shall be disregarded
for purposes of the Plan unless, following reemployment, the Participant repays
the amount of the distribution to the Trustee together with interest at the rate
of 120 percent of the Federal mid-term rate, as in effect under Code Section
1274 for the first month of the Plan Year in which the restoration occurs or
otherwise in accordance with Code Section 41 1 (a)(7). Such repayment must be
made within five years of the Participant's resumption of employment with an
Employer.
Section 5.4 Disability Benefit.
------------------
(a) Subject to the provisions of Section 5.8, the amount of monthly
benefit to which a Participant is entitled under Section 4.5 because of
disability shall be equal to the amount determined by multiplying $9.60 by the
number of years of Benefit Service and UPS Benefit Service to a maximum of 30
that the Participant completed prior to his disability.
(b) This Disability Benefit shall be paid to the disabled Participant,
so long as he remains disabled, until he attains his Early Retirement Date at
which time the Participant will receive in lieu of such Disability Benefit an
Early Retirement Benefit. Such Early Retirement Benefit will be paid in the form
of a Qualified Joint and Survivor Benefit described in paragraph 5.3(a)(1)
commencing on the Participant's Early Retirement Date. The amount of the Early
Retirement Benefit shall be determined in accordance with this Article V,
without reduction on account of a Disability Benefit previously paid. In no
event shall a Participant receive simultaneously a Disability Benefit under this
Section and an Early Retirement Benefit.
(c) A vested Participant who is totally and permanently disabled and has
been receiving disability benefits under a short-term or long-term disability
plan or similar program the Employer sponsors or to which the Employer
contributes, shall receive, unless prohibited by the terms of such plan or
program, upon attaining his Early Retirement Date, an Early Retirement Benefit
in lieu of such disability benefit. The amount of such Early Retirement Benefit
shall be calculated in accordance with Article V, and shall be paid in the form
of the Qualified Joint and Survivor Benefit described in paragraph 5.3(a)(1)
commencing on the Participant's Early Retirement Date. Notwithstanding the
foregoing, no Early Retirement Benefit shall be paid to a Participant during
such period of time if he is receiving benefits under a short-term or long-term
disability plan or similar program the Employer sponsors by or to which the
Employer contributes.
<PAGE>
(d) If a vested married Participant receiving a Disability Benefit
in accordance with this Section dies prior to attaining his Early
Retirement Date, his spouse shall receive the Qualified Joint and Survivor
Preretirement Survivor Benefit in accordance with the terms of Section 5.5
commencing on what would have been the Participant's Early Retirement Date,
based on the Participant's Benefit Service and UPS Benefit Service.
Section 5.5 Qualified Joint and Survivor (Husband and Wife) Preretirement
-------------------------------------------------------------
Survivor Benefit.
- ----------------
(a) Each vested Participant shall have the Qualified Joint and
Survivor Benefit as described in Section 5.3 effective for the benefit of
his spouse so that if the Participant dies prior to his Annuity Starting
Date his spouse will be entitled to receive a Preretirement Survivor
Benefit commencing:
(1) if the Participant dies after attaining his Early Retirement
Date, as of the first day of the month coincident with or next
following the date of the Participant's death; and
(2) if the Participant dies on or before attaining his Early Retirement
Date, as of the first day of the month coincident with or next following the
date the Participant would have attained his Early Retirement Date.
(b) The Preretirement Survivor Benefit to which the Participant's
surviving spouse shall be entitled hereunder shall be equal to the amount which
would have been payable to the Participant's spouse under the Qualified Joint
and Survivor Benefit:
(1) if the Participant dies after he attains his Early Retirement Date,
had the Participant retired and commenced receiving benefits on the day
immediately preceding his death;
(2) if the Participant dies on or before attaining his Early Retirement Date,
had the Participant:
(A) separated from service on the date of his death (or his actual date of
separation, if earlier);
(B) survived to his Early Retirement Date;
(C) retired with an immediate Qualified Joint and Survivor Benefit at his
Early Retirement Date; and
(D) died on the day after he would have attained his Early Retirement Date.
<PAGE>
(c) Notwithstanding the foregoing, if the Participant dies before
attaining his Early Retirement Date while actively employed by an Employer after
having earned at least 25 Years of Benefit Service and UPS Benefit Service, the
Qualified Joint and Survivor Benefit used as the basis for calculating the
amount of the Preretirement Survivor Benefit shall be determined by using the
early commencement reduction factors set forth in paragraphs (1) and (2) of
subsection 5.2(b) with respect to Early Retirement Benefits.
(d) The Participant's surviving spouse may elect to defer commencement
of the Preretirement Survivor Benefit, but not later than the date the
Participant would have attained his Normal Retirement Date.
(e) In lieu of the Preretirement Survivor Benefit described in this
Section 5.5, before the first payment with respect to such benefit, the
Committee shall pay to the surviving spouse, without his consent, the present
value of the benefit if such present value does not exceed $3,500. Such present
value shall be determined by using the interest rate and mortality table
indicated in subsection 5.7(b).
Section 5.6 Coordination with Benefits Under UPS Retirement Plan and UPS
------------------------------------------------------------
Pension Plan. The benefits otherwise provided in Sections 5.2 through 5.5 of
- -------
this Plan shall be reduced in the case of any Participant, disabled Participant
or beneficiary, by the amount of any benefits payable to such Participant,
disabled Participant or beneficiary under the UPS Retirement Plan or the UPS
Pension Plan to the extent that such benefits payable under the UPS Retirement
or UPS Pension Plan are based on a period of time included in the calculation of
UPS Benefit Service for purposes of this Plan.
If a reduction in benefits is also called for in another plan or plans UPS
maintains by reason of the benefits payable to a Participant under this Plan,
the reduction in benefits shall be made only in the benefits payable under the
plan in which the Participant last participated, and if he participated in more
than one such other plan, then the reduction shall be made in the reverse order
of participation with no reduction in the benefits payable under the plan in
which the Participant first participated.
If the Participant receives one form of benefit under this Plan and another
form of benefit under the UPS Retirement Plan or UPS Pension Plan, any reduction
hereunder shall be based on actuarially equivalent forms of benefit.
Section 5.7 Determination of Present Value of Benefits. Anything to the
------------------------------------------
contrary notwithstanding, a retirement benefit computed under this Article V
shall be subject to the following:
<PAGE>
(a) Maximum Benefits.
----------------
(1) General Limitation. The maximum annual benefit payable under this
------------------
Plan shall not exceed the lesser of: (i) $90,000 (the "Dollar Limitation") or
(ii) 100 percent of the Participant's average compensation (as defined in
Treasury Regulations Section 1.415-2(d)) and reduced, if necessary, to reflect
the applicable Compensation limit set forth in subsection 1 - 1 (k), paid for
three consecutive calendar years during which he was an active Participant in
this Plan or the UPS Retirement Plan, and in which he received the greatest
aggregate compensation from an Employer or UPS, subject to the following:
(A) If the benefit is payable in any form other than a straight life
annuity, then the limitations of this subsection (1) shall be applied
by adjusting such benefit so that it is the actuarial equivalent of a
straight life annuity. In making such adjustment, the interest rate
assumption shall be the greater of five percent (the Applicable
Interest Rate described in subsection 5.7(b) in the case of a lump
sum benefit) or the interest rate specified in subsection 1. l(b) of
the Plan, and the mortality table used shall be the "Applicable
Mortality Table" described in subsection 5.7(b).
(B) For purposes of determining whether the Dollar Limitation of this
paragraph (1) is being observed:
(i) If the retirement benefit of a Participant commences before the
Participant's Social Security Retirement Age, the Defined Benefit Dollar
Limitation shall be adjusted so that it is the actuarial equivalent of an annual
benefit of $90,000 beginning at the Social Security Retirement Age, multiplied
by the Inflation Factor. The adjustment provided for in the preceding sentence
shall be made in a manner the Secretary of the Treasury prescribes which is
consistent with the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act. In making
such adjustment, the interest rate assumption shall not be less than the greater
of five percent or the interest rate specified in subsection 1. l(b) of the
Plan, and the mortality table used shall be the "Applicable Mortality Table"
described in subsection 5.7(b).
(ii) If the retirement benefit of a Participant commences after the
Participant's Social Security Retirement Age, the Defined Benefit
Dollar Limitation shall be adjusted so that it is the actuarial
equivalent of a benefit of $90,000 beginning at the Social Security
Retirement Age, multiplied by the Inflation Factor. In making such
adjustment, the interest rate assumption shall be the lesser of
<PAGE>
five percent or the interest rate specified in subsection 1. 1 (b) of the Plan,
and the mortality table used shall be the "Applicable Mortality Table" described
in subsection 5.7(b) of the Plan.
(iii) For the purposes of this subparagraph (b)(1)(B), the following definitions
shall apply:
(I) "Inflation Factor" shall mean the cost of living adjustment factor the
Secretary of the Treasury prescribes under Code Section 415(d) applied to such
items and in such manner as the Secretary shall prescribe.
(II) "Social Security Retirement Age" shall mean the age used as the
retirement age for the Participant under Section 216(l) of the Social Security
Act, except that such section shall be applied without regard to the age
increase factor, and as if the early retirement age under Section 216(l)(2) of
such Act were 62.
(C) Subject to limitations imposed elsewhere in this Plan, an annual
benefit of $10,000 or less may be paid regardless of the limitations set forth
in this subsection (a)(1) if the benefit paid the Participant from all defined
benefit plans of an Employer does not exceed $10,000 for the Plan Year or any
prior Plan Year, and the Employer has not at any time maintained a defined
contribution plan in which the Participant participated.
(D) If a Participant has less than 10 Years of Service at the time the
Participant begins to receive retirement benefits under this Plan, the average
compensation limitation, as well as the $10,000 benefit exception described in
subparagraph (a)(1)(E) above, shall be reduced by multiplying such limitation by
a fraction, the numerator of which is the number of Years of Service as of and
including the current limitation year, and the denominator of which is 10. In
the case of the Dollar Limitation where the Participant has less than 10 years
of participation in this Plan and/or the UPS Retirement Plan, such limitation
shall be reduced by a fraction, the numerator of which is the number of years of
participation in the Plan as of and including the current limitation year, and
the denominator of which is 10.
(2) Limitation--Two Types of Plans. In any case in which a Participant
------------------------------
has at any time participated in this Plan and a defined contribution plan
an Employer or a Related Company maintained, the sum of the defined benefit
fraction and the defined contribution fraction for any limitation year
<PAGE>
beginning before December 31, 1999 may not exceed 1.0. For any limitation year
beginning after December 31, 1999, such limitation shall not apply.
(A) The defined benefit fraction applicable to a Participant for any
limitation year is a fraction
(i) the numerator of which is the projected annual benefit of the
Participant, determined as of the close of the limitation year, under all
defined benefit plans an Employer or a Related Company maintains and
(ii) the denominator of which is for limitation years commencing after
December 31, 1982, the lesser of
(I) the product of 1.25 multiplied by the Dollar Limitation in effect
under Code Section 415(b)(1)(A) for such year (including any adjustment required
or permitted by subsection 235(g)(4) of the Tax Equity and Fiscal Responsibility
Act of 1982) or
(II) the product of 1.4 multiplied by an amount equal to 100 percent of
the Participant's average compensation (as defined in Treasury Regulation
Section 1.415-2(d)) and reduced, if necessary, to reflect the applicable
Compensation limit set forth in subsection 1.1 (k) for the three consecutive
calendar years during which he participated in the Plan or the UPS Retirement
Plan and in which he had the greatest aggregate compensation from an Employer, a
Related Company or UPS.
(B) The defined contribution fraction applicable to a Participant for any
limitation year is a fraction
(i) the numerator of which is the sum of the annual additions for all
limitation years to the Participant's accounts, determined as of the close of
the limitation year, under all defined contribution plans an Employer or a
Related Company maintained and
(ii) the denominator of which is the sum of the lesser of the
following amounts determined for the present limitation year and
each prior limitation year of the Participant's service with an
Employer or a Related Company:
<PAGE>
(I) 1.25 multiplied by the Dollar Limitation in effect under
Code Section 415(c)(1)(A) for such limitation year; or
(II) 1.4 multiplied by 25 percent of the Participant's
compensation (as defined in Code Section 415(c)(3) and
reduced, if necessary, to reflect the applicable
Compensation limit set forth in subsection 1. 1 (k) of the
Plan for such limitation year.
(3) Limitation Adjustment. The rate of a Participant's benefit accrual
---------------------
will be automatically frozen or reduced to a level necessary to prevent the
limitations of this subsection (a) from being exceeded; provided, that if the
limitations of this subsection (a) will be exceeded only as a result of
considering another defined benefit plan an Employer or a Related Company
sponsors and this Plan as one plan, the Participant's benefit accrual under this
Plan will not be frozen or reduced to a level necessary to prevent the
limitations of this subsection (a) from being exceeded in the event that such
other defined benefit plan provides for the freezing or reduction of benefit
accruals.
(4) Single Plan Rule. For purposes of this subsection (a), all defined
----------------
benefit plans of an Employer or a Related Company (whether or not terminated)
shall be considered as one defined benefit plan.
(5) Automatic Adjustment. The limitations imposed by this subsection (b)
--------------------
shall be adjusted automatically when permitted or required by law.
With respect to increases in these limitations which are permitted by
law to reflect the impact of inflation, in the event that a
Participant's Normal or Early Retirement Benefit, as determined in
accordance with Article V as of his Annuity Starting Date, must be
reduced by reason of the foregoing limitations in effect at such time,
the following rules shall apply:
(A) A Participant's Normal or Early Retirement Benefit determined at his
Annuity Starting Date in accordance with Article V, taking into account the
Compensation limitation described at subsection 1. 1 (k) which is applicable at
such time (the "Compensation Limitation "), and applying the applicable
limitation or limitations at paragraph 5.7(a)(1) or subparagraph 5.7(a)(1)(B)(i)
(as applicable, the "415 limitations") shall, following the Annuity Starting
Date, be adjusted upward as the result of any subsequent increase in the 415
limitations, provided however, that in no event shall such benefit exceed the
Participant's Normal or Early Retirement Benefit determined as of the
Participant's Annuity Starting Date in accordance with Article V, including the
Compensation Limitation.
<PAGE>
(B) Notwithstanding the foregoing, in no event shall participant's Normal
or Early Retirement Benefit, for any particular year, exceed the 415 limitation
for such year (based on the Participant's age on his Annuity Starting Date), and
no increase as described in subparagraph (A) above shall be retroactive for any
preceding year.
(C) A Participant's Normal or Early Retirement benefit shall not be
adjusted upward as the result of any change to the Compensation Limitation
following the Annuity Starting Date.
(6) Limitation Year. For purposes of this subsection (a), the limitation
---------------
year is the calendar year.
(7) Annual Addition. For purposes of this subsection (a), the term "annual
---------------
addition" means the sum of the following credited to a Participant's account for
any limitation year:
(i)the Employer's contributions;
(ii)the Employee's contributions; and
(iii)forfeitures.
(b) Determination of Present Value.
------------------------------
(1) For purposes of (A) determining whether the present value of a
Participant's vested Accrued Benefit, Qualified Joint and Survivor Benefit or
Qualified Pre-Retirement Survivor Benefit exceeds $3,500, or (B) determining the
amount of a Participant's vested Accrued Benefit upon termination of the Plan,
the present value of such benefit or annuity shall be calculated by using the
Applicable Mortality Table and the Applicable Interest Rate.
(2) The "Applicable Mortality Table" means the mortality table the
Secretary of the Treasury prescribes, based on the prevailing commissioners'
standard table (described in Code Section 807(d)(5)(A)) used to determine
reserves for group annuity contracts issued on the date as of which present
value is being determined (without regard to any other subparagraph of Code
Section 807(d)(5)). As of January 1, 1995, the Applicable Mortality Table
pursuant to the foregoing is the GAM 83 mortality table.
(3) "Applicable Interest Rate" means the annual rate of interest on 30-
year Treasury securities for the month before the date of distribution or such
other time as the Secretary of the Treasury may by regulations prescribe.
<PAGE>
(c) Incorporation by Reference. Notwithstanding anything to the contrary in
--------------------------
this Section 5.7, the limitations on maximum benefits payable from this
Plan shall be construed in accordance with Code Section 415 and the
regulations thereunder, which are incorporated into this Plan by reference.
Section 5.8 Limitations Regarding Time of Payment of Benefits.
-------------------------------------------------
(a) General Limitation. All payments authorized under this Plan shall
------------------
commence no later than the 60th day after the close of the Plan Year in which
the Participant terminates his service with an Employer or UPS, provided proper
application under Section 4.1 is filed.
(b) Mandatory Limitation.
--------------------
(1) Commencement of payments. Notwithstanding subsection (a), the
------------------------
entire interest of a Participant shall be, or shall begin to be,
distributed no later than April 1 of the calendar year following the
calendar year in which he attains age 70 1/2. A Participant who receives a
distribution or distributions in accordance with the preceding sentence
while still employed shall continue to earn years of Benefit Service (up to
a maximum of 30 years), and the amount of his benefit shall be adjusted
annually, or otherwise in accordance with Treasury regulations. For any
Participant who attains 70 1/2 after January 1, 1999, the entire interest
shall be, or shall begin to be, distributed no later than April 1 of the
calendar year following the later of calendar year in which he either
attains age 70 1/2 or retires.
(2) Payments after death of Participant or spouse. If distribution of
---------------------------------------------
a Participant's interest has begun as provided in paragraph (1), and the
Participant dies before his entire interest has been distributed to him,
then the remaining portion of such interest shall be distributed at least
as rapidly as under the method of periodic distribution being used on the
date of his death. If a Participant dies before distribution of his
benefit has begun, then the entire interest of the Participant shall be
distributed within five years after the death of the Participant unless one
of the following exceptions applies:
(A) If any portion of the Participant's interest is payable to a
designated beneficiary for life, or over a period not extending beyond
such beneficiary's life expectancy, and such distributions begin not
later than one year after the Participant's death or such longer
period as may be prescribed by Treasury regulations, distribution
shall be deemed to have occurred on the date periodic distributions
began and the five-year limitation shall not apply to such portion.
<PAGE>
(B) If the designated beneficiary is the Participant's
surviving spouse, distributions shall begin not later than the date on
which the Participant would have attained age 70-1/2; but if the
surviving spouse dies before distributions to such spouse begin, the
above distribution rules shall be applied as though the surviving
spouse were the Participant.
(3) Notwithstanding anything in the Plan to the contrary, the form and
timing of all distributions under the Plan shall be in accordance with the
Treasury regulations issued under Code Section 401(a)(9), including the
incidental death benefit requirement of Code Section 401(a)(9)(G).
Section 5.9 Designation of Beneficiary.
--------------------------
(a) Each Participant may designate beneficiaries (including a primary
beneficiary and one or more contingent beneficiaries in the event of the death
of the primary beneficiary) to receive such benefits as may be payable under the
provisions of this Plan. The Participant may change the designation of any
beneficiary from time to time by filing a new designation with the Committee, to
be effective upon receipt by the Committee, provided the Committee receives it
prior to the Participant's death. The consent of any previously designated
beneficiary to such change shall not be required to effect the change. No
designation of a beneficiary shall be effective to the extent that honoring such
designation would conflict with the rights of the Participant's spouse under
Section 5.3 or Section 5.5, and no such designation shall be effective to the
extent that, in conjunction with such spousal rights, it would require
duplication of benefit payments.
(b) In the event that a Participant fails to designate a beneficiary or if
a designated beneficiary does not survive the Participant or is not specified
elsewhere in this Plan, payment will be made to the spouse of the deceased
Participant, if any, but if none survives the Participant, to his surviving
children. If no children survive the Participant, payment will be made to the
Participant's estate. If a beneficiary who has begun to receive payments
pursuant to Article V dies before all payments are made, the balance due, if
any, shall be paid in a lump sum or in installments, as the Committee shall
direct, to the estate of the deceased beneficiary.
Section 5.10 Final Payment to Participant or Beneficiary. Any final
-------------------------------------------
payment or distribution to any Participant or a legal representative or
beneficiary of a Participant, or any one claiming under them, in accordance with
this Plan, shall be in full satisfaction of all claims against the Trust Fund,
the Trustee, the Committee, the Company, each Employer and all representatives,
officers, employees and agents thereof. The person receiving the payment or
distribution may be required to execute a receipt and release of all claims
under the Plan upon a final payment or distribution or a receipt and release to
the extent of any partial payment or distribution. The Committee shall
determine the form and content of such receipt or release.
<PAGE>
Section 5.11 Suspension of Benefits
----------------------
(a) If a Participant entitled to receive benefits (which shall be deemed to
include the actual receipt of such benefits) should (1) return to employment
with an Employer or (prior to attaining age 65) with UPS or (2) remain in
employment with an Employer after attaining age 65, the payment of benefits to
the Participant shall be suspended for the period in which the Participant
remains employed but not beyond the required beginning date set forth in
subparagraph 5.8(b)(1)(A). Benefit payments will be resumed no later than the
first day of the third calendar month after the month in which the Participant
ceases to be employed as aforesaid (or attains age 65 in the case of a
Participant who has returned to employment with UPS), provided the Participant
has informed the Committee that he has ceased such employment.
(b) For purposes of this Section 5.11, a period of employment as to which
benefits shall be suspended means any calendar month or a four or five week
period ending in a calendar month, if the Participant completes at least 40
hours of service (as defined in 29 CFR (S) 2530.200b-2(a)(1) and (2)) with an
Employer in such month or payroll period.
(c) Any Participant coming under this provision will be notified by first-
class mail or personal delivery within the first calendar month or payroll
period in which the Plan withholds the payment of benefits.
(d) Any Participant may request a determination of whether specific
contemplated employment will be considered employment for purposes of this
Section 5.11. Request for status determinations may be submitted in accordance
with the claim procedures set forth in Section 9.4.
Section 5.12 Withholding of Income Tax.
-------------------------
(a) Notification of Withholding of Federal Income Tax. All Participants
-------------------------------------------------
and beneficiaries entitled to receive benefits under the Plan shall be notified
of the Plan's obligation to withhold federal income tax from any benefits
payable pursuant to the terms of the Plan. Such notice shall be in writing, be
given at the time set forth in subsection (b) and contain the information set
forth in subsection (c).
(b) Time of Notice. The notice described in subsection (a) shall be
---------------
provided not earlier than six months before such payment is to be made and not
later than the time the Participant or beneficiary is furnished with his claim
for benefits application.
(c) Content of the Notice. The notice subsection (a) requires shall, at a
---------------------
minimum:
<PAGE>
(1) with respect to any distribution which is an eligible rollover
distribution within the meaning of Code Section 3405(c)(3) (other than an
eligible rollover distribution of less than $200 which is exempt from
withholding under regulations prescribed by the Secretary of the Treasury),
advise the payee that there shall be withheld from such distribution an
amount equal to 20 percent thereof (or such other amount as may from time
to time be prescribed by the Code, or the Secretary of the Treasury or his
delegate), unless the payee directs the Committee to transfer such
distribution as a direct rollover to an eligible retirement plan, within
the meaning of Section 5.13 hereof, in accordance with such procedures as
the Committee may prescribe (a "transfer direction"),
(2) with respect to any distribution which is not an eligible rollover
distribution within the meaning of Code Section 3405(c)(3):
(A) advise the payee of his right to elect not to have
withholding apply to any payment or distribution and explain the
manner in which such election may be made, and include or indicate the
source of any forms necessary to make the election;
(B) advise the payee of his right to revoke such an election at
any time;
(C) advise the payee that any election remains effective until
revoked;
(D) advise the payee that penalties may be incurred under the
estimated tax payment rules if the payee's payments of estimated tax
are not adequate and sufficient tax is not withheld from payments
under this Plan; and
(E) advise the payee that the election not to have federal income
tax withheld from benefits is prospective only and that any election
made after a payment or distribution to the payee is not an election
with respect to such payment or distribution.
(d) Effective Date of Election. Any transfer direction, election or
--------------------------
revocation of any election by a payee shall become effective immediately upon
receipt by the Committee of the transfer direction, election or revocation.
Thereafter, the Committee shall, unless otherwise provided by applicable law,
regulation or other guidance by the Secretary of the Treasury or his delegate,
instruct the Trustee to withhold federal income tax in accordance or consistent
with the instructions filed by the payee.
<PAGE>
(e) Failure to Make Election
------------------------
(1) In the case of an eligible rollover distribution, if the payee
fails to provide the Committee with a transfer direction, the Committee
shall instruct the Trustee to withhold an amount equal to 20 percent of the
amount of the distribution (or such other amount the Code, or the Secretary
of the Treasury or his delegate) may from time to time prescribe.
(2) In the case of a distribution which is not an eligible rollover
distribution, if the payee fails to provide the Committee with a
withholding certificate, the Committee shall instruct the Trustee to
withhold, in the case of a periodic distribution, the amount which would be
required to be withheld from such payment if such payment were a payment of
wages by an employer to an employee for the appropriate payroll period,
determined as if the payee were a married person claiming three withholding
allowances. In the case of a nonperiodic distribution, 10 percent of the
amount of the distribution shall be withheld.
(f) Coordination with Internal Revenue Code and Regulations. The Committee
-------------------------------------------------------
shall discharge its withholding and notice obligations in accordance with the
Code and regulations and such other guidance with respect thereto as the
Secretary of the Treasury or his delegate may promulgate from time to time.
Section 5.13 Direct Rollover.
---------------
(a) With respect to any distribution described in this Article V
which constitutes an eligible rollover distribution within the meaning of Code
Section 401 (a) (3 1) (C), the distributes thereof shall, in accordance with
procedures the Committee establishes, be afforded the opportunity to direct that
such distribution be transferred directly to an eligible retirement plan (a
"direct rollover"). For purposes of the foregoing sentence, an "eligible
retirement plan" is (1) a qualified trust within the meaning of Code Section 402
(c)(8)(A) which is a defined contribution plan the terms of which permit the
acceptance of rollover distributions, (2) an individual retirement account or
annuity within the meaning of Code Section 408 (other than an endowment
contract), or (3) an annuity plan within the meaning of Code Section 403(a),
which the distributes specifies in such form and at such time as the Committee
may prescribe.
(b) Notwithstanding the foregoing, if the distributes elects to
have his eligible rollover distribution paid in part to him or her, and paid in
part as a direct rollover:
(1) The direct rollover must be in an amount of $500 or more.
<PAGE>
(2) A direct rollover to two or more eligible retirement plans
shall not be permitted.
(c) The Committee shall, within a reasonable period of time prior to
making an eligible rollover distribution from this Plan, provide a written
explanation to the distributes of the direct rollover option described above, as
well as the provisions under which such distribution will not be subject to tax
if transferred to an eligible retirement plan within 60 days after the date on
which the distributes received the distribution. The distributes shall be
afforded at least 30 days after receipt of the written explanation to consider
the decision whether or not to elect a direct rollover, but if he thereafter
makes an affirmative election, said election may be implemented without regard
to the aforesaid 30-day time period.
(d) That portion of a Participant's distribution which represents the
minimum distribution that Code Section 401(a)(9) (see in this regard
subparagraph 5.8(b)(1)(A)) requires shall not be considered an eligible rollover
distribution.
<PAGE>
ARTICLE VI
----------
VESTING
-------
Section 6. 1 Vesting. Each Participant shall have a 100 percent vested
-------
interest in the Normal Retirement Benefit to which he is entitled pursuant to
subsection 5.2(a), after five Years of Service, but shall have no vested
interest prior thereto. In addition, the benefit to which a Participant is
entitled shall be fully vested in such Participant upon his attainment of his
Normal Retirement Date.
Any Participant in the Plan on the date of adoption of any amendment to the
vesting schedule may, within an election period which begins on the date of
adoption of such amendment to the vesting schedule and ends on the sixtieth day
after the latest of: (i) the date the amendment is adopted; (ii) the date the
amendment becomes effective; or (iii) the date the Participant is given written
notice of the amendment by the Committee, elect to have his vested percentage
determined under his vesting schedule as in effect immediately prior to the
effective date of amendment, provided he has completed three Years of Service
prior to the end of the election period. Any election will be irrevocable.
Further, no Participant shall have his vested percentage decreased by any change
in the vesting schedule.
Section 6.2 Breaks in Service for Vesting purposes. If a Participant with
--------------------------------------
no vested interest, as determined under Section 6. 1, incurs one or more
consecutive Breaks in Service:
(a) Years of Service before such Break in Service shall not be taken
into account for purposes of Section 6.1 until the Participant completes
one Year of Service after the Break in service; and
(b) Years of Service prior to the Break in Service shall not be
taken into account for purposes of Section 6. 1 if the number of
consecutive Breaks in Service equals or exceeds the greater of (i) the
aggregate number of the Participant's Years of Service (excluding Years of
Service not required to be taken into account by reason of any prior Breaks
in Service), or (ii) five with respect to a Break in Service a person
incurs who is an Employee on or after January 1, 1985, regardless of when
the Break in Service occurred.
Section 6.3 Forfeitures. All forfeitures of nonvested interests in the
-----------
Plan occurring during the Plan Year shall be applied to reduce future
contributions and shall not be used or applied to increase the benefits to which
any Participant would be entitled hereunder.
<PAGE>
ARTICLE VII
-----------
AMENDMENT, MODIFICATION AND TERMINATION, MERGER
-----------------------------------------------
Section 7. 1 Right to Amend or Terminate. The Company hopes and expects to
---------------------------
continue this Plan and the funding of benefits hereunder indefinitely; but such
continuance is not assumed as a contractual obligation and, in order to protect
Participants, the Company, and the Employers against unforeseen contingencies,
the Company expressly reserves the right, by action of the Board of Directors,
to amend or terminate this Plan at any time. Additionally, any amendment may be
made retroactive, if necessary or appropriate to qualify or maintain the Plan as
a qualified plan within the meaning of Code Section 401(a), and to qualify or
maintain the Trust as tax-exempt under Code Section 501(a), and the regulations
issued thereunder. Notice of any material amendment of the Plan may be given by
posting, by mail or by such other means as may be acceptable under ERISA.-
Section 7.2 Liquidation of Trust Fund. Upon termination or partial
-------------------------
termination of the Plan, each affected Participant's benefits, determined prior
to the date of termination, shall become fully vested to the extent funded and
to the extent such benefit is not restricted pursuant to the provisions of
Section 7.8 herein. The assets of the Trust Fund shall be allocated among
Participants and beneficiaries, after payment of administration expenses of the
Plan, in the following order of priority:
(a) Benefits Payable Three Years Prior to Termination. First, to
-------------------------------------------------
provide benefits that become payable three or more years before the date of
termination of the Plan, or that would have become payable had the
Participant retired immediately prior to the beginning of such three-year
period, provided that
(1) the benefit payable to a Participant or beneficiary (or that
could have been payable) shall be based on the provisions of the Plan
in effect during the five year period prior to the date of termination
of the Plan; and further provided that,
(2) the lowest benefit payable during such three-year period
shall be considered the benefit payable for purposes of this category
(a).
(b) Other Benefits Eligible for Termination Insurance. Second, to the
-------------------------------------------------
extent that a benefit has not been provided in category (a), the remaining
assets shall be allocated to provide any benefit provided under the Plan
for Participants and beneficiaries to the extent guaranteed by the Pension
Benefit Guaranty Corporation pursuant to Title IV of ERISA.
(c) Other Benefits. Third, to the extent that a benefit under the
--------------
Plan has not been provided in the foregoing categories, the assets of the
Plan shall be allocated to
<PAGE>
provide all other non-forfeitable benefits under the Plan and, finally, to
provide all other benefits under the Plan.
If the assets of the Trust Fund applicable to any of the above categories
are insufficient to provide full benefits for all persons in such group, the
benefits otherwise payable to such persons shall be allocated pro rata on the
basis of the present value of benefits as of the termination date. The Actuary
shall calculate the allocation of the assets of the Trust Fund in accordance
with the above priority categories, and certify his calculations to the
Committee. Each of the above classes shall be divided into subclasses, giving
first preference within the class to those Participants over 65 and those
beneficiaries receiving benefits; second preference to Participants over 60
years of age; third preference to Participants over 55 years of age; fourth
preference to Participants under 55 years of age having a Deferred Vested
Benefit; and fifth preference to all others. The Committee may establish
additional subclasses within the classes set forth in subsections (a), (b), and
(c).
Section 7.3 Finality of Payment. Prior to making any distribution under
-------------------
the terms of subsection 7.2, the Committee shall satisfy itself that this
procedure complies with applicable law and shall obtain such waivers and
authorizations from Participants and beneficiaries as it deems advisable.
Section 7.4 Non-Diversion of Assets. Except as provided in Section 3.5
-----------------------
hereof, no part of the assets of the Trust, by reason of any amendment or
otherwise, shall at any time be used for, or diverted to, purposes other than
for the exclusive benefit of Participants, former Participants or their
beneficiaries, and for the payment of administrative expenses under the Plan, or
as will cause, or permit the assets of the Trust to revert to, or become the
property of the Company or any Employer at any time prior to the satisfaction of
all liabilities under the Plan. When all such liabilities have been satisfied,
any assets remaining will revert to the Company.
Section 7.5 Committee Functions During Termination. If the Plan is
--------------------------------------
terminated, the Committee in office at the time of such termination shall
continue to act with its full powers hereunder until the completion of the
allocation and distribution of the assets of the Trust Fund as in this Article
VII provided. A majority of the members of the Committee then 'in office shall
have the power to fill any vacancies occurring in the Committee after such
termination by resignation, death or otherwise. In the event the Committee
within a reasonable time after such termination shall not have provided for such
allocation and distribution, the Board of Directors shall succeed to all powers
and duties of the Committee and shall provide for such allocation and
distribution of the assets of the Trust Fund.
Section 7.6 Notice of Termination. Notice of termination of the Plan, in
---------------------
whole or in part, shall be deemed adequately given if the Company or the
Committee mails written notice of the same or uses other means as may be
acceptable under ERISA to the latest address on file of each Participant or
beneficiary who is affected by such termination.
<PAGE>
Section 7.7 Merger and Consolidation of Plan, Transfer of Assets. In the
---------------------------------------------
case of any merger or consolidation with, or transfer of assets and liabilities
to, any other plan, provisions shall be made so that each Participant in the
Plan on the date thereof (if the Plan then terminated) would receive a benefit
immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
prior to the merger, consolidation or transfer if the Plan had been terminated.
Section 7.8 Limitation on Benefits.
----------------------
(a) In the event of Plan termination, the benefit payable to any
Highly Compensated Employee or any former Highly Compensated Employee shall
be limited to a benefit that is nondiscriminatory under Code Section
401(a)(4). If payment of benefits is restricted in accordance with this
subsection (a), assets in excess of the amount required to provide such
restricted benefits shall become a part of the assets available under
Section 7.2 for allocation among Participants and their joint annuitants
and beneficiaries whose benefits are not restricted under this subsection
(a).
(b) The restrictions of this subsection (b) shall apply prior to
termination of the Plan to any Participant who is a Highly Compensated
Employee or former Highly Compensated Employee and who is one of the 25
highest paid nonexcludable employees or former employees of an Employer for
any Plan Year. The annual payments to any such Participant shall be
limited to an amount equal to the payments that would have been made to the
Participant under a single life annuity that is the Actuarial Equivalent of
the sum of the Participant's accrued Normal Retirement Benefit and any
other benefits under the Plan.
(c) The restrictions in subsection (b) shall not apply:
(1) if, after the payment of benefits to such Participant, the
value of the Plan's assets equals or exceeds 1 10 percent of the value
of the Plan's current liabilities (within the meaning of Code Section
412(l)(7)); or
(2) if the value of the benefits payable to such Participant is
less than one percent of the value of current liabilities.
<PAGE>
ARTICLE VIII
------------
INVESTMENTS
-----------
Section 8.1 Direction of Investments. The Committee shall, except to the
------------------------
extent it has expressly delegated such authority to the Trustee or an investment
manager, have full and exclusive power and authority to direct the Trustee as to
the investment of the assets of the Trust, and the Trustee shall invest,
reinvest, buy, sell, hypothecate or otherwise deal with the assets of the Trust
Fund in accordance with the Committee's directions. Two members of the
Committee shall certify such directions in writing. Investments shall not be
restricted to investments now or hereafter legal for trust funds under the laws
of the State of Georgia or any other jurisdiction. The Committee may, to the
extent permitted by law, direct investment in:
(a) Qualifying employer real property (as defined in Section
407(d)(4) of ERISA);
(b) Qualifying employer securities (as defined in Section
407(d)(5) of ERISA);
(c) Other securities and other investments as the Committee
directs, including but not limited to common trust funds and group benefit
trusts of the Trustee and contributions to the capital of any corporation
all of whose stock the Trustee owns.
Section 8.2 Annual Valuation of Trust Fund. As of December 31 in each
------------------------------
year, or as of the end of any shorter accounting period that the Committee shall
select, all of the assets in the Trust shall be valued by or under the
supervision of the Committee. Such valuation shall be made in accordance with
market quotations, when available, and on the basis of such other factors as the
Committee deems appropriate.
<PAGE>
ARTICLE IX
----------
PLAN COMMITTEE
--------------
Section 9. 1 Establishment of Plan Committee. An administrative committee
-------------------------------
consisting of not less than three members whom the Board of Directors shall
appoint shall administer the Plan. The Committee shall be the Plan
Administrator as that term is used in ERISA, and agent for service of process
with respect to the Plan. The Board of Directors may remove Committee members
at any time and they may resign at any time, such resignation to be effective
when the Board of Directors accepts it. The Board of Directors shall fill all
vacancies. The Committee may appoint from their number such committees, which
may include individuals not members of the Committee, with such powers as they
shall determine; may authorize one (1) or more of their number, or any agent, to
execute or deliver any instrument, or to make any payment in their behalf, and
may employ legal counsel, actuaries, agents, and such clerical, accounting and
other services as they may require in carrying out the provisions of the Plan.
A majority of the members of the Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions or other
action the Committee takes at a meeting shall be by the vote of the majority of
the Committee at any meeting, or without a meeting, by instrument in writing
that all of the members of the Committee sign.
Section 9.2 Delegation of Specific Responsibilities. The members of the
---------------------------------------
Committee may agree in a writing each member signs to allocate to any one of
their number or to other persons (including corporations) any of the
responsibilities with which they are charged pursuant hereto, including the
appointment of an investment manager to manage the investments of the Trust
Fund, provided the responsibilities and duties so delegated are definitively set
forth so that the person to whom the delegation is made is clearly aware of such
duties and responsibilities. If such delegation is made to a person not a
member of the Committee, that person or, in the case of a corporation, its
responsible officer, shall acknowledge the acceptance and understanding of such
duties and responsibilities.
Section 9.3 Power to Establish Regulations. The Committee shall establish
------------------------------
rules and regulations for the administration of the Plan and the Committee.
Except as otherwise herein expressly provided, the Committee shall have the
exclusive right and discretion to interpret the Plan and decide any matters
arising in the administration and operation of the Plan, and any interpretations
or decisions so made shall be conclusive and binding on all persons.
Section 9.4 Claims Procedure.
----------------
(a) All claims for benefits hereunder shall be directed to the Committee or
to a member of the Committee designated for that purpose. Within 90 days
following receipt of a claim for benefits, the Committee shall determine whether
the claimant is entitled to benefits under the Plan, unless additional time is
required for processing the claim. In this event, the Committee shall, within
the initial 90-day period, notify the claimant that additional time is needed,
explain the reason for the extension, and indicate
<PAGE>
when a decision on the claim will be made, which must be within 180 days of the
date the claim is filed.
(b) A denial by the Committee of a claim for benefits shall be stated in
writing and delivered or mailed to the claimant. Such notice shall set forth
the specific reasons for the denial, written in a manner calculated to be
understood by the claimant without benefit of legal or actuarial counsel. The
notice shall include specific reference to the Plan provisions on which the
denial is based and a description of any additional material or information
necessary to perfect the claim, an explanation of why this material or
information is necessary, and the steps to be taken if the claimant wishes to
submit his claim for review.
(c) The Committee shall afford a reasonable opportunity to any claimant
whose request for benefits has been denied for a review of the decision denying
the claim. The review must be requested by written application to the Committee
within 60 days following receipt by the claimant of written notification of
denial of his claim. Pursuant to this review, the claimant or his duly
authorized representative may review any documents which are pertinent to the
denied claim and submit issues and comments in writing.
(d) The Committee shall ordinarily make a decision on the claimant's appeal
of the denial of benefits within 60 days of the receipt of the request for
review, unless additional time is required for a decision on review, in which
event the decision shall be reviewed no later than 120 days after receipt of the
request for ruling. Notice in writing of the extended time required shall be
given to the claimant within 60 days of his request for review. The decision on
review shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, and specific
reference to the Plan provisions on which the decision is based.
Section 9.5 Forfeiture in Case of Unlocatable Participant or Beneficiary.
------------------------------------------------------------
If the Committee is unable to pay any benefits under the Plan to any Participant
or beneficiary who is entitled to benefits hereunder when such benefits are due
because the identity or whereabouts of such person cannot be ascertained, the
Committee shall proceed as follows:
(a) Within 90 days of the date any such benefits are payable but cannot be
paid hereunder due to the circumstances stated above, the Committee shall send
an appropriate notice to such individual, to the last address for such
individual listed in the Committee's records.
(b) If this notice is returned as unclaimed or the individual cannot be
located, during each of the next three Plan Years the Committee shall send a
notice to the last address listed in its records for the individual.
<PAGE>
(c) If on the last day of the last of the three Plan Years referred to
above the individual cannot be located, all amounts held for his benefit shall
be forfeited and all liability for payment thereof shall thereupon terminate,
unless the law requires another procedure. In any such case, the funds released
as a result of such forfeiture shall be dealt with as provided in Section 6.3.
However, if an individual subsequently makes what the Committee determines to be
a valid and proper claim to the Committee for such amounts, they will be
restored and will be distributable in accordance with the terms of this Plan.
Section 9.6 Liability of the Committee. The Committee and the members
--------------------------
thereof, to the extent of the exercise of their authority, shall discharge their
duties with respect to the Plan solely in the interests of the Plan's
Participants and their beneficiaries, and for the exclusive purpose of providing
benefits thereto in accordance with the terms of the Plan and to defray the
reasonable administration expenses thereof. In all such actions or omissions
the Committee and each member thereof shall exercise the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims; provided, however, that no
member shall be responsible for the actions or omissions of a member or any
other party that is a fiduciary with respect to this Plan, other than himself,
which are not in conformity hereto, unless such member knowingly participates in
or knowingly conceals such conduct which he knows to be in breach of this
standard, his own conduct has enabled the other member or other fiduciary to be
in breach of this standard, or he has knowledge of such breach by another member
or other fiduciary and fails to make reasonable efforts under the circumstances
to remedy such breach.
Section 9.7 Fiduciary Responsibility Insurance, Bonding. If the Company
-------------------------------------------
has not done so, the Committee may direct the purchase of appropriate insurance
on behalf of the Plan and the Plan's fiduciaries, including the members of the
Committee, to cover liability or losses occurring by reason of the acts or
omissions of a fiduciary; provided, however, that to the extent the Plan
purchases such insurance must permit recourse by the insurer against the
fiduciary in the case of a breach of a fiduciary duty or obligation by such
fiduciary. The Trust Fund shall bear the cost of such insurance unless the
Company provides and pays for the insurance. The Trustee also shall obtain a
bond covering all the Plan's fiduciaries, and pay for the bond from the assets
of the Trust Fund.
Section 9.8 Meetings of Committee. The Committee shall hold meetings
---------------------
periodically upon such notice, at such place or places, and at such time or
times as it may determine from time to time. Notice of a meeting may be waived
in writing.
Section 9.9 Compensation of Committee. The members of the Committee may
-------------------------
receive reasonable compensation for their services as the Board of Directors may
from time to time determine. Such compensation and all other expenses of the
Committee, including the compensation of officers, actuaries or counsel, agents
or others that the Committee may employ, shall be paid out of the Trust Fund,
unless paid by the Company. Notwithstanding the
<PAGE>
foregoing, any Committee member whom an Employer employs on a full-time basis
shall receive no compensation, but may be reimbursed for expenses incurred.
Section 9.10 Books and Records. The Committee shall keep appropriate books
-----------------
and records.
Section 9.11 Tables for Calculation. The Committee shall adopt, from time
----------------------
to time, service, interest and mortality tables for use in all calculations
required in connection with the Plan.
Section 9.12 Disbursements. The Committee shall determine the manner in
-------------
which the Trust Fund shall be disbursed under the terms of the Plan and Trust
Agreement.
Section 9.13 Allocation of Responsibility Among Fiduciaries for Plan and
-----------------------------------------------------------
Trust Administration. The fiduciaries hereunder, including the Trustee, the
- ----- --------------
Company, each Employer, the Board of Directors and the Committee shall have only
those specific powers, duties, responsibilities and obligations as are
specifically given them under this Plan or the Trust Agreement. In general, the
Employers shall have the sole responsibility for making the contributions
necessary to provide benefits under the Plan as specified in Article V, and the
Board of Directors shall have the sole authority to appoint and remove the
Trustee, members of the Committee and any Investment Manager and to amend or
terminate, in whole or in part, this Plan or the Trust, except as otherwise
provided. The Committee shall have the sole responsibility for the
administration of this Plan, as described in this Plan and the Trust. Subject
to any direction from the Committee, the Trustee shall have the responsibility
for the administration of the Trust and the management of the assets held under
the Trust, as specifically provided in the Trust. Each fiduciary warrants that
any directions given, information furnished, or action taken shall be in
accordance with the provisions of the Plan or the Trust, as the case may be,
authorizing or providing for such direction, information or action.
Furthermore, each fiduciary may rely upon any such direction, information or
action of another fiduciary as being proper under this Plan or the Trust, and is
not required under this Plan or the Trust to inquire into the propriety of any
such direction, information or action. It is intended under this Plan and the
Trust that except as provided in Section 9.6, each fiduciary shall be
responsible for the proper exercise of its own powers, duties, responsibilities
and obligations under this Plan and the Trust and shall not be responsible for
any act or failure to act of another fiduciary. No fiduciary guarantees the
Trust Fund in any manner against investment loss or depreciation in asset value.
<PAGE>
ARTICLE X
---------
GENERAL PROVISIONS
------------------
Section 10. 1 Prohibition Against Attachment.
------------------------------
(a) None of the benefits payable hereunder shall be subject to the claims
of any creditor of any Participant or beneficiary nor shall the same be subject
to attachment, garnishment, or other legal or equitable process by any creditor
of the Participant or beneficiary, nor shall any Participant or beneficiary have
any right to assign, alienate, anticipate, commute, pledge, encumber or assign
any of such benefits.
(b) Exception to general prohibition against attachment for Qualified
-----------------------------------------------------------------
Domestic Relations Orders
- -------------------------
(1) General rule. The restrictions of subsection (a) of this Section
-------
10. 1 will not be violated by either (A) the creation, assignment or
regulation of a right to payments from this Plan by reason of a Qualified
Domestic Relations order or (B) the making of such payments.
(2) Definition of qualified Domestic Relations Order. For purposes of
------------------------------------------
this subsection (c), the term "Qualified Domestic Relations Order" means
any judgment, decree or order (including approval of a property settlement
agreement), made pursuant to a State domestic relations law (including a
community property law), which relates to the provision of child support,
alimony payments or marital property rights to a spouse, former spouse,
child or other dependent of a Participant (an "Alternate Payee") and which:
(A) creates or recognizes the right of an Alternate Payee to, or
assigns to any Alternate Payee the right to, receive all or a portion
of the benefits payable with respect to a Participant under this Plan;
(B) clearly specifies (i) the name and last known mailing address
(if any) of the Participant and the name and mailing address of each
Alternate Payee covered by the order, (ii) the amount or percentage of
the Participant's benefits the Plan is to pay to each Alternate Payee,
or the manner in which such amount or percentage is to be determined,
(iii) the number of payments or period to which such order applies,
and (iv) that the order applies to this Plan;
(C) does not require this Plan to provide any type or form of
benefit, or any option, not otherwise provided under this Plan,
unless, in the case of any payment before a Participant has separated
from service, the order requires payment of benefits to an Alternate
Payee (i) on or after the date the Participant
<PAGE>
attains (or would have attained) the earliest age on which he could
elect to receive retirement benefits under the Plan, (ii) as if the
Participant had retired on the date such payment is to begin under
such order (but taking into account only the present value of the
benefits actually accrued and not taking into account the present
value of any employer subsidy for early retirement), and (iii) in any
form in which such benefits may be paid under the Plan to the
Participant (other than in the form of a joint and survivor annuity
with respect to the Alternate Payee and his subsequent spouse);
(D) does not require this Plan to provide increased benefits
(determined on the basis of actuarial equivalence); and
(E) does not require the payment of benefits to an Alternate
Payee which are required to be paid to another Alternate Payee under
another order previously determined to be a Qualified Domestic
Relations Order.
(3) Procedures for Qualified Domestic Relations Orders. The
---------------------------------------------------
Committee shall develop and implement procedures (A) for determining
whether an order the Plan receives is a "Qualified Domestic Relations
Order" within the meaning of subsection (c) of this Section 10. 1, (B) for
administering distributions under such orders, and (C) for holding amounts
which would be payable under such orders pending the determination of an
order's status as a Qualified Domestic Relations Order.
Section 10.2 Facility of Payment. If any Participant or Beneficiary shall
-------------------
be physically or mentally incapable of receiving or acknowledging receipt of any
payment due under the terms of the Plan, the Committee may direct the Trustee to
make any such payment to a legal representative or, if no legal representative
shall have been appointed, to any person or institution maintaining such
Participant or beneficiary, and the payment to such person or institution in
good faith shall constitute a valid and complete discharge for such payment.
Section 10.3 Payment to Minor Beneficiary. If the beneficiary of any
----------------------------
Participant shall be a minor and no guardian shall have been appointed for him,
the Committee may direct the Trustee to retain any payment due under the Plan
for his benefit until he attains majority. Such amount, as the Committee
authorizes, may be held in cash, deposited in bank accounts, or invested or
reinvested in direct obligations of the United States, and the income thereon
may be accumulated and invested, or the income and principal may be expended and
applied directly for the maintenance, education and support of such minor
without the intervention of any guardian and without application to any court.
Section 10.4 No Rights of Employment. The Plan shall not confer upon any
--------------------
Employee or Participant any right of employment, nor shall any provision of the
Plan interfere with the right of, an Employer to discharge any Employee.
<PAGE>
Section 10.5 Payments Only From Trust Fund. Except as otherwise required
-----------------------------
by law, no liability shall attach to any Employer for payment of any benefits or
claims hereunder and every Participant or beneficiary or person claiming under
them shall have recourse only to the Trust Fund for payment of any benefit
hereunder and the rights of such persons are hereby expressly limited
accordingly.
Section 10.6 Applicable Law. All provisions of the Plan, including
--------------
definitions, shall be construed according to the laws of the State of Georgia,
except to the extent preempted by Federal law.
Section 10.7 Titles. Titles of Articles and subsections are inserted for
-------
convenience only and shall not affect the meaning or construction of the Plan.
Section 10.8 No Access to Books and Records. Nothing herein or in the
------------------------------
Trust Agreement contained shall give any Participant or beneficiary or any other
person the right or privilege to examine or have access to the books or records
of any Employer or of the Committee or the Trustee; nor shall any such person
have any right, legal or equitable, against any Employer or against any
director, officer, employee, agent or representative thereof or against the
Trustee or the Committee, except as herein expressly provided or permitted by
law.
Section 10.9 USERRA. Notwithstanding any provision of this Plan to the
------
contrary, contribution, benefits and service credit with respect to qualified
military service (as defined in Code Section 414(u)) will be provided in
accordance with Code Section 414(u).
<PAGE>
ARTICLE XI
----------
TOP-HEAVY PROVISIONS
--------------------
Section 11.1 Definitions. The following definitions apply to this Article:
-----------
(a) "Top-Heavy Plan" -- The Plan is a Top-Heavy Plan in any Plan
----------------
Year in which:
(1) the Plan is a member of a Top-Heavy Group, if the Plan is
described in paragraph 11.2(c)(1) or (2) below; or (2) the Plan is not
a member of an Aggregation Group as described in paragraph 11.2(c)(1)
or (2) below, and, as of the Determination Date, the Cumulative
Accrued Benefit of the Plan for Key Employees exceeds 60 percent of
the Cumulative Accrued Benefit of the Plan for all Participants.
(b) "Key Employee" means an Employee or former Employee who at any
--------------
time during the Plan Year or any of the four preceding Plan Years is:
(1) an officer of an Employer having annual compensation from the
Employer of more than $45,000 (provided, however, that no more than
the lesser of (A) 50 Employees or (B) the greater of three Employees
or 10 percent of the Employees shall be treated as officers under this
paragraph),
(2) one of the 10 Employees having annual compensation from an
Employer of more than $30,000 and owning the largest interests in the
Employer,
(3) an owner of five percent of the outstanding stock of an
Employer or stock possessing more than five percent of the total
combined voting power of all stock of the Employer, or
(4) an owner of one percent of the outstanding stock of an
Employer or stock possessing more than one percent of the total
combined voting power of all stock of the Employer, who has annual
compensation from the Employer of more than $150,000.
For purposes of paragraph (2) hereof, if two Employees have the same interest in
an Employer, the Employee with the greater annual Compensation shall be treated
as having a larger interest. For purposes of determining ownership in an
Employer (i) the constructive ownership rules of Code Section 318, as modified
by substituting "5 percent" for "50 percent" in subparagraph (a)(2)(C) thereof,
shall apply, but (ii) the rules of Code Sections 414(b), (c) and (in) shall not
apply. Each beneficiary of a Key Employee is a Key Employee.
<PAGE>
(c) "Aggregation group" means a group of plans consisting of more
-------------------
than one plan and including:
(1) each plan of an Employer in which a Key Employee is a
participant;
(2) each other plan of an Employer which enables any plan
described in (1) to meet the requirements of Code Sections 401(a)(4)
or 410; and
(3) any plan not described in (1) or (2) which an Employer elects
to include, provided that such inclusion does not prevent the group
from meeting the requirements of Code- Sections 401(a)(4) and 410.
(d) "Top-Heavy Group" is an Aggregation Group for which, as of the
-----------------
Determination Date, the Total Benefit for Key Employees exceeds 60 percent
of the Total Benefit for all Participants.
(e) "Determination Date" is the last day of the first Plan Year and
--------------------
thereafter the last day of the preceding Plan Year.
(f) "Account Aggregate" is, with respect to a defined contribution
-------------------
plan, the sum of accounts plus the sum of all distributions made from such
accounts during the five-year period ending on the Determination Date,
provided that (1) rollover contributions and similar transfers an Employee
initiated, (2) the account of any Employee who was a Key Employee in a
prior Plan Year but is no longer a Key Employee, and (3) any accrued
benefits attributable to deductible employee contributions, and (4) the
account of any individual who has not received any compensation from an
Employer (other than benefits under any Plan an Employer maintained) during
the five year period ending on the Determination Date, shall not be taken
into account. A transfer from one plan of an Employer to any other such
plan shall be considered neither a "distribution" nor a "rollover
contribution" for purposes of this subsection, but a distribution from a
terminated plan shall be considered a "distribution" for purposes of this
subsection if such terminated plan, had it not been terminated, would have
been described in paragraph 1 1. 1 (c) (1) or (2).
(g) "Cumulative Accrued Benefit" is, with respect to a defined
----------------------------
benefit plan, the sum of the present values of all accrued benefits plus
the sum of distributions made with respect to such benefits during the
five-year period ending on the Determination Date, provided that (1)
rollover contributions and similar transfers an Employee initiated, (2) the
accrued benefit of any Employee who was a Key Employee in a prior Plan Year
but is no longer a Key Employee, and (3) any accrued benefits attributable
to deductible employee contributions, and (4) the accrued benefit of any
individual who has not received any compensation from an Employer (other
than benefits under any plan an
<PAGE>
Employer maintained) during the five-year period ending on the
Determination Date, shall not be taken into account. A transfer from one
plan of an Employer to any other such plan shall be considered neither a
distribution nor a rollover contribution for purposes of this subsection,
but a distribution from a terminated plan shall be considered a
distribution for purposes of this subsection if such terminated plan, had
it not been terminated, would have been described in paragraph 1 1. 1
(c)(1) or (2).
(h) "Total Benefit" is the sum of the Account Aggregate of all plans
---------------
within an Aggregation Group which are defined contribution plans, and the
Cumulative Accrued Benefit of all plans within an Aggregation Group which
are defined benefit plans.
Solely for the purpose of determining if the Plan, or any other plan
included in a required aggregation group of which this Plan is a part, is
Top-Heavy, the accrued benefit of an Employee other than a Key Employee
shall be determined under (a) the method, if any, that uniformly applies
for accrual purposes under all plans an Employer maintains, or (b) if there
is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rule of Code
Section 411(b)(1)(C).
(i) "Testing Period" means a period of consecutive Years of Service
--------
(not exceeding five) during which the Participant had the greatest
aggregate compensation from an Employer, except that such years shall not
include (1) years beginning after the close of the last year in which the
Plan was a Top-Heavy Plan.
Section 11.2 Top-Heavy Vesting Schedule. For each Plan Year for which the
--------------------------
Plan is a Top-Heavy Plan, the vesting schedule provided in this Section 11.2
(the "Top-Heavy Vesting Schedule") shall apply, and for each Plan Year
thereafter for which the Plan is not a Top-Heavy Plan, the vesting schedule
provided in Section 6.1 shall apply; provided, however, that any change in a
vesting schedule shall, with respect to each Participant, be subject to Section
6. 1. The Top-Heavy Vesting Schedule is as follows:
NON-FORFEITABLE
YEARS OF SERVICE PERCENTAGE
- --------------------- ---------------
Less Than 2 0
2 But Less Than 3 20
3 But Less Than 4 40
4 But Less Than 5 60
5 or More 100
Section 11.3 Top-Heavy Minimum Benefit. For each Plan Year for which the
-------------------------
Plan is a Top-Heavy Plan, the accrued benefit derived from Employer
contributions for each Participant who is not a Key Employee, when expressed as
a single life annuity (with no ancillary benefits) beginning at his normal
retirement age under the Plan, shall not be less than the product of (a)
<PAGE>
the Participant's average compensation during the Testing Period and (b) the
lesser of (1) two percent multiplied by the number of the Participant's Years of
Service (counting for this purpose only Years of Service with an Employer and
not UPS) or (2) 20 percent. For purposes of this Section 11.3 a Year of Service
shall not be taken into account if the Plan was not a Top-Heavy Plan for any
Plan Year ending during such Year of Service.
Section 11.4 Top-Heavy Adjustment to Section 415 Limitations. For each
-----------------------------------------------
Plan Year for which the Plan is a Top-Heavy Plan, the limit imposed by paragraph
5.7(a)(2) shall be applied by substituting "1.0" for "1.25" in each place
where it appears unless an Employer elects to make, and does make, additional
contributions sufficient to meet the requirements specified in subsection (b)
hereof. Such election shall only be effective for those Plan Years in which:
(a) the Plan would not be a Top-Heavy Plan as defined in subsection 1
1. 1 (a) above, if "ninety percent" were substituted for "sixty percent" in
paragraph 1 1. 1 (a) (2) and subsection 11.1(d), and
(b) with respect to each plan described in subsection 1 1. 1 (c)(1)
or (2)
(1) the minimum benefit described in Code Section 416(c)(2) (as
modified by Code Section 416(h)(2)(A)(ii)(II)) is provided by each
such plan which is a defined contribution plan; and
(2) the minimum benefit described in Code Section 416(c)(1) (as
modified by Code Section 416(h)(2)(A)(ii)(I)) is provided by each such
plan which is a defined benefit plan.
Section 11.5 Certain Benefits Disregarded. The requirements of Section
----------------------------
11.2 and Section 11.3, above, must be met without taking into account
contributions or benefits under Chapters 2 or 21 of the Code, Title II of the
Social Security Act, or any other federal or state law.
IN WITNESS WHEREOF, the Company has caused this indenture to be executed as of
the date first written above.
ATTEST: OVERSEAS PARTNERS LTD.
By: /s/ Bruce M. Barone
-------------------
Title: Title: President and CEO
<PAGE>
SECOND AMENDMENT TO THE
OVERSEAS PARTNERS CAPITAL CORPORATION
MASTER TRUST AGREEMENT
THIS SECOND AMENDMENT is made on the day of ,1997, by Overseas
Partners Capital Corporation, a corporation duly organized and existing under
the laws of the State of Georgia (hereinafter called the "Company").
W I T N E S S E T H:
--------------------
WHEREAS, effective January 1, 1995, the Company established The
Overseas Partners Capital Corporation Retirement Plan (the "Plan"); and
WHEREAS, in connection therewith, the Company established the Trust
and the Overseas Partners Capital Corporation Master Trust Agreement (the "Trust
Agreement") , which was amended by First Amendment dated September 11, 1995; and
WHEREAS, effective January 1, 1997, the Company changed the name of
the Plan to The Overseas Partners Ltd. and Subsidiaries Retirement Plan; and
WHEREAS, Article 12.2 of the Trust Agreement allows the Company to
amend the Trust Agreement; and
WHEREAS, the Company desires to amend the Trust Agreement to reflect
the new name of the Plan.
NOW THEREFORE, the Company does hereby amend the Trust Agreement,
effective on the date of execution of this Second Amendment, as follows:
1 .
The second "WHEREAS" clause on page 1 of the Trust Agreement shall be
deleted in its entirety and replaced with the following:
WHEREAS, The Overseas Partners Ltd. and Subsidiaries Retirement Plan and the
OPCC Thrift Plan (hereinafter referred to as "Plans") have been designated as
eligible Plans;
2 .
Article 1.1 shall be amended by deleting the phrase "the OPCC
Retirement Plan" in the third line thereof and by substituting therefor the
phrase "The Overseas Partners Ltd. and Subsidiaries Retirement Plan."
<PAGE>
3 .
Article 2.1 shall be amended by deleting the phrase "The OPCC
Retirement Plan" at the beginning thereof and by substituting therefor the
phrase "The Overseas Partners Ltd. and Subsidiaries Retirement Plan".
Except as specifically provided herein, the Trust Agreement shall
remain in full force and effect as prior to this Second Amendment.
IN WITNESS WHEREOF, the Company has caused this Second
Amendment to be executed on the day and year first written above.
OVERSEAS PARTNERS CAPITAL CORP.
By: /s/ Bruce M. Barone
Title: President and CEO
ATTEST:
Title:
2
ATtax:\OPL\RETIRE\TRUST.AMD
<PAGE>
Exhibit 10 (iiii)
1
<PAGE>
AGREEMENT OF GENERAL PARTNERSHIP
--------------------------------
OF
--
OPL GROUP INVESTMENT PARTNERSHIP
--------------------------------
This PARTNERSHIP AGREEMENT, dated as of December 1, 1997, of OPL Group
Investment Partnership is entered into by and among Overseas Partners Ltd., a
Bermuda company ("OPL"), Overseas Partners Re Ltd., a Bermuda company ("OP Re"),
and those other Persons identified at any time or from time to time on Exhibit
-------
A.
- -
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, OPL and OP Re wish to join together to form a general partnership
under the provisions of the Partnership Act, 1902, and the Exempted Partnerships
Act, 1992, of Bermuda, for the purpose and on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual promises and
agreements herein made, and other good and valuable consideration, the
undersigned hereby agree as follows:
ARTICLE I
GENERAL
For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
Section 1.1. Definitions.
-----------
(a) "Act" means the Exempted Partnerships Act 1992 of Bermuda.
(b) "Affiliate" has the meaning specified in Section 4.7.
(c) "Agreement" means this Partnership Agreement, together with any
Exhibits or other attachments and any documents incorporated herein, as
amended from time to time.
(d) "Borrowing Partner" has the meaning specified in Section 3.1(e).
(e) "Capital Account" has the meaning specified in Section 3.1(f).
2
<PAGE>
(f) "Distribution Amount" has the meaning specified in Section 5.1.
(g) "Indemnified Parties" has the meaning specified in Section 6.3.
(h) "Investments" has the meaning specified in Section 2.2.
(i) "Liability" has the meaning specified in Section 7.1.
(j) "Liquidation" has the meaning specified in Section 8.5.
(k) "Offer" has the meaning specified in Section 5.1(a).
(l) "Offered Interest" has the meaning specified in Section 5.1(a).
(m) "Offeree" has the meaning specified in Section 5.1(a).
(n) "Offeror" has the meaning specified in Section 6.1(a).
(o) "Partner" means any of those persons identified at any time or
from time to time on Exhibit A attached hereto.
(p) "Partnership" means the partnership created pursuant to this
agreement and named in accordance with Section 2.1.
(q) "Partnership Majority" has the meaning specified in Section 2.3.
(r) "Partnership Share" has the meaning specified in Section 3.2(a).
(s) "Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.
(t) "Resident Representative" has the meaning specified in Section
-------
2.6.
- ---
(u) "Transfer Counsel" has the meaning specified in Section 6.2.
Section 1.2. References. The words "herein", "hereof" and "hereunder" and
----------
other words of similar import refer to this Agreement as a whole and not to any
particular section or other subdivision.
3
<PAGE>
ARTICLE II
PARTNERSHIP
Section 2.1. Name of Partnership. The name of the Partnership shall be the
-------------------
OPL Group Investment Partnership (the "Partnership"). The Partnership's
business may be conducted under any other name or names as a Partnership
Majority shall determine on notice to the Partners.
Section 2.2. Purpose and Business of the Partnership. As the Partners are
---------------------------------------
desirous of forming a partnership in order to enhance administrative efficiency
and take advantage of the increased benefits and reduced costs ordinarily
associated with the conduct of business in such form and with larger investment
portfolios, the purpose and business of the Partnership is to invest in stocks,
warrants, options, stock futures contracts and other equity instruments and
notes, bonds, debentures, and other interest bearing instruments (collectively,
"Investments"), to own, manage and supervise Investments, to share the profits
and losses therefrom, and to engage in all other activities related, incidental
or ancillary thereto. In furtherance of this purpose, the Partnership shall
have all powers necessary, suitable or convenient for the accomplishment of this
purpose, alone or with others, as principal or agent, including, without
limitation, the following:
(a) to buy, sell and invest, directly or indirectly and with or
without other Persons, through partnerships, joint ventures or otherwise,
in equity or debt Investments, whether such Investments are readily
marketable or not;
(b) to hold, receive, mortgage, pledge, transfer, exchange, otherwise
dispose of, and otherwise deal in and exercise all rights, powers,
privileges and other incidents of ownership or possession with respect to
any Investments and other property;
(c) to open, maintain and close accounts with brokers;
(d) to open, maintain and close custody accounts and bank accounts
and draw checks and other orders for the payment of moneys;
(e) to engage outside accountants, custodians, investment advisors,
attorneys and any and all other third-party agents and assistants, both
professional and nonprofessional, including, without limitation, Affiliates
of the Partners, and to compensate them in such reasonable degree and
manner as may be deemed necessary or advisable;
4
<PAGE>
(f) to enter into, make and perform all contracts, agreements and
other undertakings and borrow such funds as may be necessary or advisable
or incident to carrying out its purpose;
(g) to sue and be sued, to prosecute, settle or compromise all claims
against third parties, to compromise, settle or accept judgment with
respect to claims against the Partnership and to execute all documents and
make all representations, admissions and waivers in connection therewith;
and
(h) to engage in any other lawful acts or activities which are
incidental to the powers set forth in paragraphs (a) through (g) of this
-------------- ---
Section 2.2.
-----------
Section 2.3. Location of the Principal Place of Business. The Partnership's
-------------------------------------------
registered office and principal place of business is Mintflower Place, 8 Par-la-
Ville Road, Hamilton HM GX, Bermuda, but the Partnership may maintain such other
location outside the United States as shall be designated by any number of
Partners which together constitute more than half of the total number of
Partners in the Partnership and which additionally have in the aggregate
Partnership Shares which in total equal a percentage greater than 50% (a
"Partnership Majority"). The Partnership shall not have an office in the United
States. The management of the Partnership shall be undertaken by the Partners
acting through the Partnership's office in Bermuda wherein the Partnership's
audited accounts and records of its acts and financial affairs shall be
maintained.
Section 2.4. Term of Partnership. The term for which the Partnership shall
--------------------
exist shall be from the date hereof until December 1, 2047, unless sooner
terminated as hereinafter provided.
Section 2.5. Property Ownership. All assets and property, whether real or
------------------
personal, tangible or intangible, owned by the Partnership, unless otherwise
determined by a Partnership Majority, shall be owned by and held in the name of
the Partnership.
Section 2.6. Resident Representative. Codan Services Limited or such other
-----------------------
body or Person as the Partnership Majority shall at any time and from time to
time determine, shall be the Resident Representative of the Partnership for the
purposes of and as required under the Act.
ARTICLE III
CONTRIBUTIONS AND ACCOUNTS
Section 3.1. Capital Contributions of the Partners.
-------------------------------------
(a) Initial Capital Contributions. Each Partner has made or shall be
-----------------------------
obligated to make capital contributions to the Partnership aggregating the
5
<PAGE>
amount specified on Exhibit A as its initial capital contribution. Such
---------
initial capital contributions shall be made sufficiently in advance of the
time that Partnership obligations are due in order to permit such
obligations to be satisfied promptly, and in any event not later than such
time as is specified by a Partnership Majority.
(b) Subsequent Capital Contributions. The Partners may make
--------------------------------
additional capital contributions, in which event their partnership interest
will be amended accordingly. In the event (other than upon a Liquidation
(as defined in Section 8.5) of the Partnership or a Partner's interest in
-----------
the Partnership) a Partnership Majority determines that additional funds
are necessary or desirable, then any Partner included in such Partnership
Majority shall be permitted to make a loan to the Partnership on the terms
provided in Section 3.1(d). A Person which acquires its Partnership
--------------
interest in return for a capital contribution hereunder shall be treated as
a Partner for all purposes of this Agreement, including the allocations and
distributions under Section 3.2 hereof, on the date on which such Partner
-----------
makes its initial capital contribution to the Partnership. Except as
provided in Sections 5.2 and 5.5, a Person may be admitted to the
------------ --
Partnership with the consent of all of the Partners, and a Partnership
Majority shall be permitted to make all amendments to this Agreement deemed
necessary or appropriate by it to reflect such admission, except that no
such amendment shall have the effect of altering a Partner's interest in
the profits or losses of the Partnership or Partnership interest without
such Partner's consent.
(c) Liquidation Adjustments. Without limiting Section 3.2(c), upon a
----------------------- --------------
Liquidation (as defined in Section 8.5) of the Partnership or of a
-----------
Partner's interest in the Partnership, the Partnership shall make
adjustments to the Capital Accounts of the Partners to reflect the actual
or anticipated profits and losses allocable among the Partners in
accordance with, or as if there had been, an actual disposition of the
assets of the Partnership at their respective fair market values.
(d) Loans to Partnership. All advances or payments to the
--------------------
Partnership by any Partner prior to the Liquidation of the Partnership or
such Partner's interest, other than the capital contributions made pursuant
to Sections 3.1(a) or 3.1(b) hereof, shall be deemed to be loans by such
--------------- ------
Partner to the Partnership
(e) Loans from Partnership to Partners. A Partnership Majority may,
----------------------------------
at any time or from time to time, authorize the Partnership to make a loan
or loans to any Partner. Any such loan shall (i) entitle the Partnership
to receive interest thereon for each quarter during which the loan is
outstanding at a rate not less than the Loan Rate; (ii) be evidenced by a
duly executed demand note; (iii) be repaid by the Partner receiving such
loan (a "Borrowing Partner"), together with interest thereon as aforesaid,
before the Borrowing Partner is entitled to receive any distribution of
proceeds from dispositions of Partnership assets which are to
6
<PAGE>
be made to Partners pursuant to this Agreement; (iv) be secured by a pledge
of the Borrowing Partner's interest in the Partnership; and (v) be payable
on demand by the Partnership.
(f) Capital Accounts. The Partnership shall establish a "Capital
----------------
Account" for each Partner which shall be determined and maintained
throughout the full term of the Partnership in accordance with Section
704(b) of the Code and Treasury regulations thereunder. "Capital Account"
shall mean the aggregate amount of capital contributions made by such
Partner to the Partnership (i) reduced by (1) any losses allocated to such
Partner, (2) any distributions made to such Partner, and (3) such Partner's
distributive share of Partnership expenditures, and (ii) increased by any
profits allocated to such Partner. The Capital Account of each Partner
shall reflect all prior adjustments to the Capital Account of any
predecessor holder of such Partner's interest in the Partnership or portion
thereof and any other item which is required to be reflected in a Partner's
Capital Account under the first sentence of this Section 3.1(f) or
--------------
otherwise under this Agreement.
Section 3.2. Partnership Shares.
------------------
(a) Partnership Share. The share of each Partner in the Partnership
-----------------
("Partnership Share") shall be as set forth after its respective name in
Exhibit A attached hereto. Except as provided in the last sentence of
---------
Section 3.2(b) with respect to adjustments in accordance with Section
--------------
704(c) of the Code, Partnership Shares shall be determined in proportion to
the capital contributions of the Partners.
(b) Allocation of Profits, Losses and Credits. Subject to the last
-----------------------------------------
sentence of this Section 3.2(b), the profits, losses and credits of the
--------------
Partnership (whether from operations, from the sale, exchange or other
disposition of assets of the Partnership, or otherwise) shall be allocated among
the Partners in accordance with their Partnership Shares as aforesaid.
"Profits" or "losses" as used herein shall include, without limitation, each
item of Partnership income, gain, loss and deduction. Upon the admission to the
Partnership of any other Person not already a Partner, and upon the making by
any existing Partner of an additional capital contribution (where less than all
existing Partners then make additional capital contributions in equal amounts),
the Partnership shall adjust Capital Accounts and Partnership Shares in
accordance with Section 704(c) of the Code and subsequent allocations of profits
and losses (which include items thereof) shall be made under Section 704(c) of
the Code to take into account such adjustments.
(c) Distributions. All distributions (other than distributions in
-------------
connection with a Liquidation (as defined in Section 8.5) of the
-----------
Partnership or of any Partner's interest in the Partnership) to the
Partners of assets of the Partnership, including, but not limited to,
distributions of the net proceeds of
7
<PAGE>
sales by and loans to the Partnership, shall be made to the Partners in
accordance with their Partnership Shares within 24 hours of demand, as
aforesaid. Distributions in connection with a Liquidation (as defined in
Section 8.5) of the Partnership or of any Partner's interest in the
-----------
Partnership shall be made in accordance with Section 8.5.
-----------
ARTICLE IV
MANAGEMENT AND ADMINISTRATION
Section 4.1. Authority. Subject to the terms and conditions of this
---------
Agreement, all decisions regarding the Partnership and the management and
control of its affairs shall be made by a Partnership Majority. A Partner may
delegate its authority to another Partner or may delegate authority for specific
actions to any agent or third party subject to the control of the delegating
Partner. The Partners shall, except as otherwise provided herein, have all of
the rights and powers of general partners as provided in the Act and as
otherwise provided by law.
Section 4.2. Action by the Partnership.
-------------------------
(a) The Partnership shall act either by resolution adopted at a
meeting of the Partnership, held either in Person or by telephone, or
without a meeting by written consent as evidenced by an instrument signed
(or several instruments in like form together signed) by a delegate or
representative of each Partner or by cable, telex or facsimile in such
manner as such representatives shall unanimously agree. The presence of
each Partner's delegate or representative shall constitute a quorum for
meetings or acts of the Partnership. All meetings of the Partnership shall
be conducted at the Partnership's principal office or such other place
outside the United States as the Partners may agree.
(b) An act of the Partnership shall require the vote or consent of
the delegates or representatives of Partners constituting not less than a
Partnership Majority.
Section 4.3. Action Within The United States. Each Partner shall be
-------------------------------
prevented from taking any action on behalf of the Partnership from a location
within the United States without first obtaining oral or written advice from
legal counsel that such action will not cause the Partnership to be engaged in a
United States trade or business.
Section 4.4. United States Office. The Partnership shall not maintain any
--------------------
office or other fixed place of business within the United States, or hold itself
out to the public as maintaining an office or fixed place of business within the
United States.
8
<PAGE>
,POS=BOTTOM,QUAD=CENTER)
Section 4.5. Appointments and Removals. Appointments and removals of its
-------------------------
delegates and representatives by a Partner shall be effective upon written
notice thereof given to the other Partners.
Section 4.6. Acts by Partners. No Partner shall take, or commit the
----------------
Partnership to take, any action, either in its own name in respect of the
Partnership or in the name of the Partnership, without the prior written
approval of a Partnership Majority.
Section 4.7. Conflicts. No Partner shall be required (whether directly or
---------
through its delegate) to manage, or participate in the management of the
Partnership as its sole and exclusive function, and it may have other investment
interests and may engage in other activities in addition to those relating to
the Partnership, including the making or management of other investments.
Subject to the foregoing, any Partner may manage or participate in the
management of, the Partnership with the prior consent of a Partnership Majority.
Without limitation on the foregoing, each Partner recognizes that the other
Partners have the authority to make other investments and that the other
Partners have made and will make other types of investments. Neither the
Partnership nor any Partner shall have any right by virtue of this Agreement or
the Partnership relationship created hereby in or to such other ventures or
activities or to the income or proceeds derived therefrom, and the pursuit of
such ventures and activities by each Partner, even if competitive with the
affairs of any of the other Partners or the Partnership, is hereby consented to
by each Partner and shall not be deemed wrongful or improper. Except as
otherwise provided in this Agreement, no Partner nor any Affiliate (as
hereinafter defined) of a Partner shall be obligated to present any particular
investment opportunity to the Partnership even if such opportunity is of a
character which, if presented to the Partnership, could be taken by the
Partnership, and such Partner and each Affiliate of a Partner shall have the
right to take for its own account, or to recommend to others, any such
particular investment opportunity. "Affiliate(s)" of a Person means (x) any
officer, director, trustee, employee, shareholder, partner or relative within
the third degree of kindred of such Person; (y) any corporation, partnership,
trust or other entity directly or indirectly controlling, controlled by, under
common control with, or advising or managing such Person; and (z) any officer,
director, trustee, shareholder, general partner or employee of any entity
described in clause (y) above.
----------
ARTICLE V
TRANSFER OR ASSIGNMENT OF PARTNERSHIP SHARE
5.1. Right of First Refusal.
----------------------
(a) Subject to Sections 5.2 and 5.5, if any Partner (the "Offeror")
------------ ---
desires to sell or offer for sale or otherwise transfer from time to time
all or any portion of the Offeror's interest in the Partnership (all or
such portion is
9
<PAGE>
hereinafter referred to as the "Offered Interest"), the Offeror shall first
furnish to each other Partner (an "Offeree") a document setting forth the
proposed purchase terms of the bona fide offer for purchase of the Offered
Interest for a specific dollar amount (the "Offer"), which document shall
include the name and address of the proposed purchaser of the Offered
Interest. For a period of 30 days after the receipt by an Offeree of the
description of the Offer, an Offeree shall have a right of first refusal to
purchase the Offered Interest which such Offeree must exercise by notice in
writing to the Offeror within such 30 day period.
(b) In the event that an Offeree shall have timely exercised its
right of first refusal, the Offeror shall sell the Offered Interest to the
Offeree, the Offeree shall pay the price specified in the Offer to the
Offeror, and the parties shall otherwise consummate said transaction no
later than 90 days after the date of delivery of the description of the
Offer to the Offeree; provided that if more than one Offeree shall have
--------
timely exercised such right of first refusal, such sale, payment and
consummation of said transaction shall be made with such Offerees on a
basis which is consistent with their proportionate interests in the
Partnership.
(c) If no Offeree timely exercises such right of first refusal with
respect to the Offer, the Offeror shall then have a period of 60 days from
the date on which such right of first refusal shall have expired to
consummate the sale of all of the Offered Interest to the proposed
purchaser identified in the document describing the Offer and on terms no
more favorable to the purchaser than those terms offered to Offerees as set
forth in the Offer. If the sale is not consummated by the Offeror pursuant
to the Offer within such 60 day period, the Offeror may not transfer or
assign any interest in the Partnership owned by it except in accordance
with the offer and notice provisions contained herein.
Section 5.2. Deferral of Transfers and Assignments. Any proposed transfer or
-------------------------------------
assignment of all or part of a Partner's interest in the Partnership, whether to
another Partner or to a third party, shall not be effective if as a result
thereof the Partnership would (in the opinion of counsel selected in good faith
by the non-transferring or non-assigning Partner with the largest Partnership
Share ("Transfer Counsel")) terminate for U.S. tax purposes. If the prohibition
set forth in the immediately preceding sentence would be operative as a result
of the consequence specified in clause (a) upon a proposed transfer or
----------
assignment of an interest in the Partnership from one Partner to another
Partner, the Partners hereby agree to negotiate in good faith to defer the
transfer of portions of the interest to be transferred so that the transfer of
no portion (i.e., neither the deferred portion nor the non-deferred portion)
- -
would cause the Partnership to terminate for U.S. tax purposes.
10
<PAGE>
Section 5.3. Binding Agreement. Any party or Person to whom a Partnership
-----------------
interest is assigned shall be subject to and bound by all of the provisions of
this Agreement as if originally a party to this Agreement.
Section 5.4. Liability Following Transfer or Assignment. A Partner shall
------------------------------------------
have no liability hereunder (including, but not limited to, any liability as a
surety) for any obligations accruing under or in connection with the Partnership
after such Partner shall have transferred or assigned its entire Partnership
interest in accordance with this Agreement.
Section 5.5. Permitted Transferees or Assignees. Any transfer or assignment
----------------------------------
of all or part of a Partner's interest in the Partnership shall not be
effective, without the consent of all of the non-transferring or non-assigning
Partners. Without limitation to the foregoing, a transferee or assignee of a
Partnership interest who does not receive such consent has no right to require
that any information or account of Partnership transactions be disclosed, to
inspect the Partnership's books, to vote on Partnership matters, to request a
meeting of the Partnership or to exercise any of the other rights of a Partner
other than to receive the share of cash and taxable income, gains, losses,
deductions or credits to which his assignor or transferor would otherwise be
entitled.
ARTICLE VI
SCOPE OF PARTNERSHIP
Section 6.1. Liability to Partnership and Other Partners. Except as
-------------------------------------------
otherwise specifically provided in this Agreement or by further written
agreement between the Partners, a Partner shall not act for, or assume any
obligation or responsibility on behalf of, the other Partners or the
Partnership. Each Partner hereby acknowledges, as among the Partners and the
Partnership, responsibility for the liabilities and obligations of the
Partnership incurred in accordance with the terms of this Agreement pro rata in
proportion to its Partnership interest. In furtherance of the foregoing, if a
Partner or any Affiliate of a Partner shall, within its authority as set forth
in this Agreement or pursuant to a final judgment of a court of applicable
jurisdiction, pay any amount on behalf or for the account of the Partnership
with respect to (a) any liability, obligation, undertaking, damage or claim for
which the Partnership shall or may, pursuant to this Agreement or other contract
or applicable law, be liable or responsible, or (b) making good any loss or
damage sustained by, or paying any duty, cost, claim or damage incurred by, the
Partnership (each such item referred to in clauses (a) and (b) above being
----------- ---
hereinafter called a "Liability"), then the Partnership shall reimburse such
Partner for such amount as shall have been so paid by such Partner. For
purposes of this Article VI, any Liability arising as a result of the
----------
insufficiency of any reserve established in connection with the dissolution of
the Partnership shall in each case be deemed to be a Liability of the
Partnership. No Partner shall be liable to any other Partner for any act
undertaken by such Partner in accordance with the terms of the obligations of
such Partner under
11
<PAGE>
this Agreement. Notwithstanding anything to the contrary contained in this
Section 7.1 or elsewhere in this Agreement, under no circumstances shall any
Partner have any right, power or authority to pay any obligation of any other
Partner or to use Partnership property or assets for the payment of any
obligation of any Partner.
Section 6.2. Limitation on Liability of the Resident Representative;
-------------------------------------------------------
Indemnification. Notwithstanding anything to the contrary in this Article VI,
- --------------- ----------
neither the Resident Representative, nor any director, officer or employee of
the Resident Representative, shall be liable for any action taken or omitted to
be taken by them hereunder or in connection herewith, except for their own gross
negligence, fraud or dishonesty. The Partners hereby agree to reimburse the
Resident Representative, on demand, for all reasonable out-of-pocket costs and
expenses incurred by the Resident Representative in connection with its duties
hereunder, including without limitation all costs and expenses of the
enforcement of this Agreement (including, without limitation, costs and expenses
incurred by any agent employed by the Resident Representative) and agree to
indemnify (which indemnification shall survive any termination of this
Agreement) and hold harmless the Resident Representative (and any such agent)
from and against any and all liability incurred by the Resident Representative
(or such agent) hereunder or in connection herewith, unless, and solely to the
extent that, such liability shall be due to gross negligence, fraud or
dishonesty on the part of the Resident Representative or such agent.
Section 6.3. Indemnification. The Partnership shall indemnify (which
---------------
indemnification shall survive any termination of this Agreement) and hold
harmless each Partner and the Resident Representative, any Affiliate of any
Partner or the Resident Representative and any trustee, officer, director,
shareholder, employee or partner of any such Affiliate (the "Indemnified
Parties") from and against any loss, expense, damage or injury suffered or
sustained by any Indemnified Party by reason of any acts, omissions or alleged
acts or omissions arising out of its activities on behalf of the Partnership or
in furtherance of the interests of the Partnership, including, but not limited
to, any judgment, award, settlement, reasonable attorneys' fees and other costs
and expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided that the acts or omissions or alleged acts
--------
or omissions upon which such actual or threatened action, proceeding or claim is
based were not due to any gross negligence, fraud or dishonesty on the part of
the Indemnification Party.
ARTICLE VII
FINANCIAL MATTERS
Section 7.1. Investments. The funds of the Partnership shall be invested in
-----------
Investments. All such investment activities shall be conducted by financial
institutions or investment managers selected by a Partnership Majority.
12
<PAGE>
Section 7.2. Books and Records of the Partnership; Fiscal Year. The
-------------------------------------------------
Partnership shall keep and maintain the books and records of the Partnership at
the principal place of business of the Partnership. The fiscal year of the
Partnership shall end on the 31st of December in each year. The books of the
Partnership shall be kept on the cash basis or the accrual basis, and the
Partnership shall be on the cash basis or accrual basis for U.S. tax purposes,
as determined by a Partnership Majority. The books and records of the
Partnership shall be audited at such times and by such accountants as shall be
determined from time to time by a Partnership Majority, and until and subject to
such determination, which may be for a restricted period, the parties hereto
jointly and severally agree pursuant to the Act that no Financial Statement or
auditor's report thereon otherwise required by the Act for any period need be
prepared for the Partnership. The funds of the Partnership which are not
invested in the Investments shall be deposited in such bank accounts or invested
in such interest-bearing or non-interest-bearing investments, as shall be
designated by a Partnership Majority.
ARTICLE VIII
DISSOLUTION OF THE PARTNERSHIP
Section 8.1. Exclusivity. No act, thing, occurrence, event or circumstance
-----------
shall cause or result in the dissolution of the Partnership, except the matters
specified in Section 8.2 below.
-----------
Section 8.2. Dissolution Events and Other Matters. The happening of any one
------------------------------------
of the following events or other matters shall cause an immediate dissolution of
the Partnership:
(a) The bankruptcy, resignation, dissolution or expulsion of a
Partner;
(b) The sale of all or substantially all of the assets of the
Partnership (except that if at least a portion of the purchase price of
such sale is evidenced by a promissory note, the Partnership will not be
dissolved by reason of such sale as long as the Partnership is the holder
of such promissory note);
(c) The agreement in writing by a Partnership Majority to dissolve
the Partnership; or
(d) The expiration of the term of the Partnership pursuant to Section
-------
2.4 hereof.
---
Without limiting the other provisions hereof, the admission of a new Partner
shall not cause a dissolution of the Partnership.
13
<PAGE>
Section 8.3. Post-Dissolution Matters. Upon the occurrence of any of the
------------------------
events specified in Section 8.2 above, the Partners (who shall act by a
-----------
Partnership Majority) shall commence to wind up the affairs of the Partnership
and to liquidate the Investments. The Partners and their successors and
assignees shall continue to share profits, losses, credits and basis during the
period of such liquidation in the same manner and proportion as immediately
before the dissolution. Following the payment of all debts and liabilities of
the Partnership (including any amounts owing to a Partner pursuant to loans
described in Section 3.1(d) hereof) and all expenses of liquidation and subject
--------------
to the right of a Partnership Majority to set up such cash reserves as and for
so long as it or they may deem reasonably necessary, the proceeds of the
liquidation and any other funds of the Partnership shall be distributed to the
Partners (after deducting from a Partner's distributive share of such proceeds
any sum such Partner owes the Partnership) in accordance with Section 3.2
-----------
hereof.
Section 8.4. Termination and Right to Distributions. Upon the completion of
--------------------------------------
the liquidation of the Partnership and the distribution of all Partnership
funds, the Partnership shall terminate and a Partnership Majority shall execute
any and all documents required in its or their judgment to effectuate the
dissolution and termination of the Partnership. Each Partner shall look solely
to the assets of the Partnership for all distributions with respect to the
Partnership and its capital contribution thereto and its share of profits,
losses, credits and basis thereof.
Section 8.5. Specified Liquidation. Notwithstanding anything to the contrary
---------------------
in this Agreement, (a) upon Liquidation of the Partnership, the proceeds of such
Liquidation shall be distributed in accordance with the positive Capital Account
balances of the Partners and, upon Liquidation of any Partner's interest in the
Partnership, the proceeds of such Liquidation shall be distributed in accordance
with the positive Capital Account balance of such Partner, in each case as
determined after taking into account all Capital Account adjustments for the
Partnership fiscal year during which such Liquidation occurs (other than those
adjustments made pursuant to this clause (a)), by the end of such fiscal year
----------
(or, if later, within 90 days after the date of such Liquidation); and (b) the
Partners shall make such other adjustments to Capital Accounts and take such
other actions by the end of such fiscal year (or, if later, within 90 days after
the date of such Liquidation) which are necessary to cause the allocations of
profits, losses, credits and basis contained in this Agreement to have
"substantial economic effect" under Section 704(b) of the Code. "Liquidation"
shall mean (i) when used with reference to the Partnership, the earlier of (1)
the date upon which the Partnership is terminated under Section 708(b)(1) of the
Code or (2) the date upon which the Partnership ceases to be a going concern,
and (ii) when used with reference to any Partner, the earlier of (x) the date
upon which there is a Liquidation of the Partnership or (y) the date upon which
such Partner's entire interest in the Partnership is terminated other than by
transfer, assignment or other disposition to a Person other than the
Partnership.
14
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.1. Notices. Any notice which a Partner is required or may desire
-------
to give any other Partner shall be given in writing, and may be given by
personal delivery or by mailing the same by registered or certified mail, return
receipt required, and shall in addition be sent by facsimile (with receipt of
the facsimile confirmed) or by telephone, to the Partner to whom such notice is
directed at the address of such Partner as kept at the registered office of the
Partnership, subject to the right of a Partner to designate a different address
for itself by notice similarly given. Any notice so given by mail shall be
deemed to have been given on the tenth day after the same is deposited in the
mail as registered or certified matter, addressed as above provided, with
postage thereon fully prepaid or on the date, if earlier, a facsimile of, or
telephone call describing, such notice is additionally received by the
Partnership. Any such notice not given by registered or certified mail as
aforesaid shall be deemed to be given upon receipt of the same by the party to
whom the same is to be given. Any notice which a Partner is required or may
desire to give the Partnership or which the Partnership is required or may
desire to give a Partner shall be given in the same manner and shall be deemed
to be given on the applicable effective date as hereinabove provided for notices
between Partners. Each Partner shall promptly give notice to the Partnership in
the foregoing manner of any attempt by another Person to obtain control of its
assets.
Section 9.2. Amendment. This Agreement may only be amended by a written
---------
consent executed (in one or more counterparts) by all the Partners; provided,
--------
however, that, notwithstanding the foregoing, amendments may be made to this
- -------
Agreement from time to time by a Partnership Majority, without the consent of
all Partners, in order to cure any ambiguity or correct any mistake, to correct
or supplement any provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Agreement which will not be inconsistent with the
provisions of this Agreement; provided, further, that no amendment shall be
-------- -------
adopted pursuant to the first proviso to this sentence unless the adoption
thereof (a) is for the benefit of or not adverse to the interests of the
Partners; (b) does not affect the intended distribution of cash or the intended
allocation of profits and losses of the Partnership among the Partners; (c) does
not affect the status of the Partnership as a partnership for U.S. Federal
income tax purposes; and (d) does not require the Partnership or any of the
Partners to submit to the laws of the United States or any state thereof.
Section 9.3. Waivers. No waiver by a Partner or the Partnership of any
-------
breach of this Agreement shall be deemed to be a waiver of any other breach of
any kind or nature and no acceptance of payment or performance by a Partner or
the Partnership after any such breach shall be deemed to be a waiver of any
breach of this Agreement whether or not such Partner or the Partnership knows of
such breach at the time it
15
<PAGE>
accepts such payment or performance. No failure or delay on the part of a
Partner or the Partnership to exercise any right it may have shall prevent the
exercise thereof by such Partner or the Partnership, and no such failure or
delay shall operate as a waiver of any default.
Section 9.4. Integration. This Agreement constitutes the entire agreement
-----------
among the parties concerning the subject matter hereof. This Agreement
supersedes any prior agreements or understandings among the parties concerning
the subject matter hereof.
Section 9.5. Interpretation. Captions and headings contained in this
--------------
Agreement in no way define, limit or extend the scope or intent of this
Agreement or affect in any way the interpretation or construction of this
Agreement. If any provision of this Agreement, or the application of such
provision to any Person or circumstances, shall be held invalid, the remainder
of this Agreement, or the application of such provision to other Persons or
circumstances, shall not be affected thereby. All nouns and pronouns, where the
context so requires, shall be deemed to include the masculine, feminine or
neuter gender, and the singular or plural number. All references in this
Agreement to "this Agreement" or to any portion of this Agreement shall be
deemed to refer to this Agreement as it may have been amended, modified,
restated and the like from time to time.
Section 9.6. Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereunder shall be governed by and interpreted in accordance with
the laws of Bermuda.
Section 9.7. Successors. Except as herein otherwise specifically provided,
----------
this Agreement shall be binding upon and inure to the benefit of the parties and
their legal representatives, successors and assigns.
Section 9.8. Execution in Counterparts. This Agreement (including any
-------------------------
amendment hereto) may be executed in several counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
instrument.
Section 9.9. Arbitration. Disputes arising out of, or in connection with,
-----------
this Agreement shall be subject to arbitration in Bermuda under the provisions
of the Bermuda International Arbitration and Cancellation Act of 1993 of
Bermuda.
Section 9.10. Remedies. If the Partnership or any party hereto obtains a
--------
judgment against any other party by reason of breach of this Agreement or
failure to comply with the provisions hereof, reasonable attorneys' fees and
expenses as fixed by the court shall be included in such judgment. Each Partner
shall be entitled to maintain, on its own behalf or on behalf of the
Partnership, any action or proceeding against any other Partner or the
Partnership (including, without limitation, any action for damages, specific
performance or declaratory relief) for or by reason of breach by such party of
this Agreement, notwithstanding the fact that any or all of the parties to such
proceeding
16
<PAGE>
may then be Partners in the Partnership, and without dissolving the Partnership
as a partnership. No remedy conferred upon the Partnership or any Partner in
this Agreement is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute (subject, however, to the limitations expressly herein set
forth).
Section 9.11. Power of Attorney. Each Partner, by its execution hereof,
-----------------
hereby irrevocably makes, constitutes and appoints the Representative Partner
and the Resident Representative, and each of the officers and directors as its
true and lawful agents and attorneys-in-fact, with full power of substitution
and full power and authority in its name, place and stead, to make, execute,
sign, acknowledge, swear to, record and file (i) this Agreement; (ii) any
amendment to this Agreement which has been adopted as herein provided; (iii) the
original certificate of Exempted Partnership and all amendments thereto required
or permitted by law or the provisions of this Agreement; (iv) all certificates
required or desirable in connection with distributions by the Partnership to the
Partners and other certificates and instruments deemed advisable by the Resident
Representative to carry out the provisions of this Agreement and any applicable
law or to permit the Partnership to carry on business in each jurisdiction where
the Partnership may be doing business; (v) all instruments which the Resident
Representative deems appropriate to reflect a change or modification of this
Agreement or the Partnership in accordance with this Agreement, including,
without limitation, the admission of new Partners or the substitution of
assignees as Partners pursuant to the provisions of this Agreement; (vi) all
conveyances and other instruments or papers deemed advisable by the Resident
Representative, including, without limitation, those to effect the dissolution
and termination of the Partnership; (vii) all fictitious or assumed name
certificates required or permitted to be filed on behalf of the Partnership; and
(viii) all other instruments or papers which may be required or permitted by law
to be filed on behalf of the Partnership.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
Overseas Partners Ltd.
By: /s/ Bruce M. Barone
-------------------
Name Printed: Bruce M. Barone
Title: President and CEO
Overseas Partners Re Ltd.
By: /s/ Leopold A. Schmidt
----------------------
Name Printed: Leopold A. Schmidt
Title: Vice President - Finance
RESIDENT REPRESENTATIVE:
By:___________________________________
Name Printed:_________________________
Title:________________________________
18
<PAGE>
__________________
EXHIBIT A
---------
Partnership Shares and
Initial Capital Contributions
-----------------------------
<TABLE>
<CAPTION>
Partnership Initial Capital
Name of Partner Share Contributions
- --------------- ----------- ---------------
<S> <C> <C>
Overseas Partners Ltd. 75.27% $1,306,338,762
Overseas Partners Re Ltd. 24.73% $ 429,163,887
Total: 100.00% $1,735,502,649
</TABLE>
______________________________________
/1/ G shared /Corp/Legal/AgrgePar.doc
19
<PAGE>
Exhibit 21
<PAGE>
SUBSIDIARIES OF OVERSEAS PARTNERS LTD.
- --------------------------------------
<TABLE>
<CAPTION>
Corporation Jurisdiction of Incorporation
----------- -----------------------------
<S> <C>
Overseas Partners Re Ltd. Bermuda
Overseas Partners Capital Corp. Delaware
OPL Funding Corp. Delaware
Overseas Partners Credit, Inc. Cayman Islands
Overseas Partners Capital (Massachusetts), Inc. Massachusetts
Overseas Partners Capital (Illinois), Inc. Delaware
Overseas Management Inc. Massachusetts
Overseas Partners (AFC), Inc. Georgia
Overseas Partners (333), Inc. Illinois
Copley One LLC. Massachusetts
Copley Place Associates, LLC. Massachusetts
Copley Place Corp., Inc. Delaware
Capital Insurance Underwriters, Inc. Delaware
Parcel Insurance Plan, Inc. Delaware
Overseas Holding Company, Inc. Delaware
</TABLE>
<PAGE>
Exhibit 23
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos. 333-
41855 (on Form S-3), 333-21571 (on Form S-3) and 333-20545 (on Form S-3) of
Overseas Partners Ltd. of our report dated January 8, 1998 appearing in this
Annual Report on Form 10-K of Overseas Partners Ltd. for the year ended December
31, 1997.
DELOITTE & TOUCHE
Hamilton, Bermuda
March 31, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
(*) THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
OVERSEAS' CONSOLIDATED BALANCE SHEETS AND THE STATEMENTS OF CONSOLIDATED INCOME
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 59,082
<DEBT-MARKET-VALUE> 91,093
<EQUITIES> 1,099,234
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,821,837
<CASH> 355,056
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 47,701
<TOTAL-ASSETS> 3,667,669
<POLICY-LOSSES> 338,425
<UNEARNED-PREMIUMS> 185,425
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 758,416
0
0
<COMMON> 13,100
<OTHER-SE> 2,214,062
<TOTAL-LIABILITY-AND-EQUITY> 3,667,669
639,071
<INVESTMENT-INCOME> 60,291
<INVESTMENT-GAINS> 187,139
<OTHER-INCOME> 247,940
<BENEFITS> 331,879
<UNDERWRITING-AMORTIZATION> 81,885
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 493,925
<INCOME-TAX> 16,810
<INCOME-CONTINUING> 477,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 477,115
<EPS-PRIMARY> 3.64
<EPS-DILUTED> 0
<RESERVE-OPEN> 265,166
<PROVISION-CURRENT> 311,777
<PROVISION-PRIOR> 13,072
<PAYMENTS-CURRENT> 120,788
<PAYMENTS-PRIOR> 130,802
<RESERVE-CLOSE> 338,425
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
