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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 26, 1996
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Angeles Participating Mortgage Trust
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(Exact Name of Registrant as Specified in Charter)
California 1-10150 95-6881527
- ---------------------------- ----------- ------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Three Pickwick Plaza, Suite 250, Greenwich, Connecticut 06830
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 861-2100
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ITEM 5. OTHER EVENTS.
On September 26, 1996, at an annual meeting of the shareholders of Angeles
Participating Mortgage Trust (the "Trust"), holders of a majority of the shares
of Class A Common Stock, par value $1.00 per share (the "Shares") and the shares
of Class B Common Stock, par value $.01 per share (the "Class B Shares"), voting
as a single class, voted to approve the following: (i) the Class A Share
Purchase Warrant (the "Class A Warrant") issued on March 15, 1994 to SAHI
Partners, and subsequently assigned to Starwood Mezzanine for the right to
purchase up to 5,000,000 Shares at a price per share of $1.00, the Class B Share
Purchase Warrant (the "Class B Warrant", collectively with the Class A Warrant,
the "Warrants") issued March 15, 1994 to SAHI, Inc. for the right to purchase up
to 2,500,000 of the Class B Shares at a price per share of $.01 and the
authorization and issuance of the Shares and Class B Shares to be issued if such
warrants are exercised (the "Warrant Proposal"); (ii) adoption of an amended and
restated Declaration of Trust (the "Restated Declaration of Trust") which, among
other things, changes the purpose and investment policy of the Trust in order to
implement a new business plan designed to allow the Trust to acquire a more
diversified portfolio of interests in real estate or real estate-related assets;
(iii) election of seven trustees to the Board of Trustees, four of whom are
affiliates of SAHI Partners, a Delaware limited partnership, SAHI Inc., a
Delaware corporation and Starwood Mezzanine Investors L.P., a Delaware limited
partnership ("Starwood Mezzanine", collectively with SAHI Partners and SAHI
Inc., "SAHI"); (iv) a transaction whereby (a) the Trust will become the sole
general partner of a newly formed limited partnership (the "Partnership") and
Starwood Mezzanine will become the initial limited partner; (b) the Trust will
be authorized to issue Shares, upon the exchange of any or all limited
partnership interests (the "Units") in the Partnership issued to Starwood
Mezzanine and (c) Starwood Mezzanine shall have the right, subject to certain
limitations and restrictions, to require the Trust to register for public sale,
any or all of the Shares issued to it upon the exercise of the Class A Warrant
or upon exchange of the Units in the Partnership issued to Starwood Mezzanine
upon the formation of the Partnership; (v) the Angeles Participating Mortgage
Trust 1996 Trustees' Share Incentive Plan; (vi) the Angeles Participating
Mortgage Trust 1996 Share Incentive Plan; and (vii) the appointment of Deloitte
& Touche LLP as the Trust's independent accountants for the fiscal year ending
December 31, 1996.
On September 26, 1996, after approval of the foregoing proposals by the
Trust's shareholders ("Shareholders"), the Trust contributed $400,000, in cash,
to the Partnership in exchange for a 8.05% interest in the Partnership and
Starwood Mezzanine contributed its entire interest in certain mortgage
participation certificates in exchange for a 91.95% interest in the Partnership.
The Trust is the sole general partner of the Partnership and Starwood Mezzanine
is the initial limited partner.
The Restated Declaration of Trust requires the Board of Trustees to issue
additional shares of Class B Shares upon the issuance of Shares in order to
maintain the existing proportion of outstanding Shares and Class B Shares and
thereby maintain the current proportionate voting interests of each class. The
Class B Shares currently account for 33-1/3% of the voting power
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of the Trust. The Restated Declaration of Trust also provides that the Class B
Shares are convertible at the option of the holder into Shares on the basis of 1
Share for 49 Class B Shares without regard to the sales price for the Shares.
As a result of the approval of the Warrant Proposal, upon exercise of the
Warrants and assuming the Class B Shares are not converted into Shares, SAHI
Partners, Starwood Mezzanine and SAHI Inc. will increase their combined voting
interests in the Trust from 39.72% to 79.64% (and to 87.32% in the event that
Starwood Mezzanine were to exchange all of its Units in the Partnership for
Shares). Upon exercise of the Warrants, the Shareholders not affiliated with
SAHI will have their voting interests reduced from 60.28% to 20.36% (and to
12.68% in the event that Starwood Mezzanine were to exchange all of its Units in
the Partnership for Shares), and therefore, their ability to influence decisions
regarding the operations and policies of the Trust will be substantially
reduced. In addition, upon the exercise of the Warrants and assuming the Class B
Shares are not converted into Shares, the Shareholders not affiliated with SAHI
will have their percentage ownership interest in the Shares reduced from 90.43%
to 30.54% (and to 19.03% in the event Starwood Mezzanine were to exchange all of
its Units in the Partnership for Shares). Starwood Mezzanine is not required to
exercise the Class A Warrant (in whole or in substantial part). Although no
assurances can be given, Starwood Mezzanine has declared its intention to
exercise its Class A Warrant for at least 2,000,000 Shares.
The Class A Warrant was issued to SAHI Partners on March 15, 1994 pursuant
to an oral agreement of February 8, 1994 and grants to SAHI Partners the right
to purchase up to 5,000,000 Shares at a price per share of $1.00. In
consideration for the issuance of the Class A Warrant, SAHI Partners paid to the
Trust $100,000, which amount will be applied against the purchase price for the
Shares purchased pursuant to the Class A Warrant. SAHI Partners paid for the
Class A Warrant with funds made available to it through the capital
contributions of its partners. As of March 15, 1996, SAHI Partners assigned the
Class A Warrant to Starwood Mezzanine. The Class A Warrant may be exercised at
any time and from time to time for the period beginning after September 26, 1996
and ending one hundred twenty (120) days subsequent to September 26, 1996.
To maintain the Class B Shareholders' 33-1/3% voting interest to take into
account the Class A Warrant pursuant to the Declaration of Trust, the Trust
issued the Class B Warrant to SAHI, Inc. The Class B Warrant grants to SAHI,
Inc. the right to purchase up to 2,500,000 Class B Shares at a price per share
of $.01. In further consideration of the issuance of the Class B Warrant, SAHI,
Inc. paid to the Trust $1,000, which amount will be applied against the purchase
price for the Class B Shares pursuant to the Class B Warrant. SAHI, Inc. paid
for the Class B Warrant with funds made available to it through the capital
contributions of its partners. SAHI, Inc. may exercise the purchase rights
represented by the Class B Warrant only upon exercise of the Class A Warrant and
only with respect to a number of Class B Shares equal to fifty percent (50%) of
the number of Shares then exercised.
On October 14, 1996, the Board of Trustees of the Trust appointed the
following officers of the Trust.
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Name Title
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Barry S. Sternlicht Chairman and Chief Executive Officer
Jay Sugarman President
Jerome C. Silvey Chief Financial Officer
Ronald J. Consiglio Secretary
The Board of Trustees also determined to move the principal executive
office of the Trust to Three Pickwick Plaza, Suite 250, Greenwich, Connecticut
06830.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Class A Share Purchase Warrant dated March 15, 1994 issued by
Angeles Participating Mortgage Trust to SAHI Partners
99.2 Class B Share Purchase Warrant dated March 15, 1994 issued by
Angeles Participating Mortgage Trust to SAHI Inc.
99.3 Shareholders Agreement dated as of March 15, 1994 by and among
SAHI Partners, SAHI, Inc. and Angeles Participating Mortgage
Trust
99.4 Assignment of Class A Share Purchase Warrant dated as of March
15, 1996 by SAHI Partners to Starwood Mezzanine Investors, L.P.
99.5 Amendment No. 1 to the Shareholders Agreement dated as of March
15, 1996 by and among SAHI Partners, SAHI, Inc., Starwood
Mezzanine Investors, L.P. and Angeles Participating Mortgage
Trust
99.6 Agreement of Limited Partnership of APMT Limited Partnership
dated September 26, 1996
99.7 Exchange Rights Agreement dated September 26, 1996 between
Angeles Participating Mortgage Trust and Starwood Mezzanine
Investors, L.P.
99.8 Registration Rights Agreement dated September 26, 1996 between
Angeles Participating Mortgage Trust and Starwood Mezzanine
Investors, L.P.
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99.9 Formation Agreement dated September 26, 1996 between Angeles
Participating Mortgage Trust and Starwood Mezzanine Investors,
L.P.
99.10 Assignment and Assumption Agreement dated as of September 26,
1996 between Starwood Mezzanine Investors, L.P. and APMT
Limited Partnership
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 28, 1996 By: /s/ Barry S. Sternlicht
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Barry S. Sternlicht
Chairman and Chief Executive Officer
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EXHIBIT 99.1
THIS WARRANT WAS ORIGINALLY ISSUED ON MARCH 15, 1994 AND SUCH ISSUANCE WAS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
WARRANT MAY NOT BE TRANSFERRED IN VIOLATION OF SECTION 6 HEREOF. THIS WARRANT
MAY ONLY BE TRANSFERRED IF REGISTERED UNDER THE ACT UNLESS, IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, SUCH REGISTRATION IS UNNECESSARY
FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
ANGELES PARTICIPATING MORTGAGE TRUST
CLASS A SHARE PURCHASE WARRANT
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Date of Issuance: March 15, 1994 Certificate No. W-001
FOR VALUE RECEIVED, Angeles Participating Mortgage Trust, a California
business trust (the "Company"), hereby grants to SAHI Partners, a Delaware
general partnership, or any transferee permitted by Section 6 hereof (the
"Holder") the right to purchase from the Company 5,000,000 shares of the
Company's Class A Shares (the "Class A Shares") at a price per share of $1.00
(the "Exercise Price").
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Holder may exercise, in whole or in
part (but not as to a fractional Class A Share) the purchase rights represented
by this Warrant at any time and from time to time after the next annual
shareholders meeting of the Company occurring after the date hereof (the "Annual
Meeting"); provided, however, that the purchase rights represented by this
Warrant (i) may be exercised only if the shareholders of the Company shall have
approved the issuance of this Warrant and the issuance of any Class A Shares
hereunder at the Annual Meeting (the "Approval") and (ii) must be exercised, if
at all, on or before that date which is 120 days subsequent to the date of the
Annual Meeting.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C
below and substantially in the form set forth in Exhibit I hereto, executed
by the Person exercising all or any part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
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(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case
the Holder shall have complied with the provisions set forth in Section 6
and Section 7 hereof;
(d) a cashiers check payable to the Company or wire transfer of
immediately available funds to an account designated by the Company in an
amount equal to the product of the number of Class A Shares being purchased
upon such exercise multiplied by the Exercise Price (the "Aggregate
Exercise Price"); and
(e) at the Company's option, the opinion described in Section 10
below.
(ii) Certificates for Class A Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five business
days after the date of the Exercise Time. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been exercised
and shall within such five-day period, deliver such new warrant to the Holder.
(iii) The Class A Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Class A Shares at the Exercise Time.
(iv) The issuance of certificates for Class A Shares upon exercise of
this Warrant shall be made without charge to the Holder or the Purchaser for
costs incurred by the Company in connection with such exercise and the related
issuance of Class A Shares. Each Class A Share issuable upon exercise of this
Warrant shall upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any Class A Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Class A Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price.
(vi) The Company shall assist and cooperate with the Holder or any
Purchaser required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company).
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(vii) The Company shall take all such actions as may be necessary to
assure that all such Class A Shares may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which Class A Shares may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon each
such issuance); and
(viii) Upon the exercise of this Warrant, the Class A Shares shall on
be issued in the name of SAHI Partners or a transferee permitted by Section 6
hereof.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Exercise Agreement substantially in the form set forth in Exhibit I hereto shall
be executed by the Purchaser or transferee permitted by Section 6 hereof. Such
Exercise Agreement shall be dated the actual date of execution thereof.
Section 2. Liquidating Dividends. If the Company declares or pays a
dividend upon the Class A Shares payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except for a share dividend payable in Class A
Shares (a "Liquidating Dividend"), then the Company shall pay to the Holder at
the time of payment thereof the Liquidating Dividend which would have been paid
to such Holder on the Class A Shares had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of
Class A Shares entitled to such dividends are to be determined.
Section 3. Purchase Rights. If at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
shares, warrants, securities or other property pro rata to the record holders of
any class of its shares (the "Purchase Rights"), then the Holder shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which Holder could have acquired if Holder had held
the number of Class A Shares acquirable upon complete exercise of this Warrant
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Class A Shares are to be determined for the grant,
issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
below:
"Convertible Securities" means any stock, shares or securities
(directly or indirectly) convertible into or exchangeable or exercisable for
Class A Shares.
"Option" means any rights or options to subscribe for or purchase
Class A Shares or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
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Section 5. No Voting Rights: Limitations of Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to purchase Class A Shares, and no enumeration herein of
the rights or privileges of the Holder shall give rise to any liability of such
Holder for the Exercise Price of Class A Shares acquirable by exercise hereof or
as a shareholder of the Company.
Section 6. Warrant Transferability. This Warrant and all rights
hereunder are not transferable, in whole or in part, without the Company's prior
written consent, which consent shall not be unreasonably withheld or delayed as
to any transfer to an affiliate of SAHI Partners. Upon such consent, any
transfer of this Warrant, in whole or in part, shall be effected upon surrender
of this Warrant with a properly executed Assignment (in the form of Exhibit II
hereto) at the principal office of the Company. Each transferee of all or any
part of this Warrant, by taking and holding the same, consents to and agrees to
be bound by the provisions of this Warrant.
Section 7. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Holder at the time
of such surrender. The date the Company initially issues this Warrant shall be
deemed to be the "Date of Issuance" hereof regardless of the number of times new
certificates representing the unexpired and exercised rights formerly
represented by this Warrant shall be issued. All Warrants representing portions
of the rights hereunder are referred to herein as the "Warrants."
Section 8. Consideration. The consideration received by the Company
for this Warrant is the sum of $100,000 cash, receipt of which is hereby
acknowledged by the Company, which amount will be applied against the first
$100,000 of the Aggregate Exercise Price for Class A Shares purchased pursuant
hereto. If the Approval is not received at the Annual Meeting, the Company shall
promptly refund to the Holder the consideration described in this Section 8
and, following such remittance, this Warrant shall be of no further force and
effect. Any new Warrants issued pursuant hereto shall not require the payment of
any additional consideration.
Section 9. Pre-Exercise Covenants of the Company. The Company, acting
through its trustees, shall, in accordance with applicable law;
(i) duly call, give notice of, convene and hold the Annual Meeting
as soon as practicable following the date hereof. At such Annual Meeting the
Company will submit to its shareholders a proposal relating to the issuance of
this Warrant and the Class A Shares exercisable hereunder for their approval;
and
(ii) include in the proxy statement distributed to shareholders
prior to the Annual Meeting the recommendation of the trustees that the
shareholders of the Company vote to approve the proposal relating to the
issuance of this Warrant and the Class A Shares exercisable hereunder, unless
the trustees shall have determined in good faith that such
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recommendation could reasonably be expected to be a breach of the trustees'
fiduciary duties under applicable law.
Section 10. Fairness Opinion. The Company shall have the right, as a
condition to the first issuance of any Class A Shares pursuant to this Warrant,
to obtain an opinion from a qualified, independent third party which may include
the Company's outside auditors (the "Appraiser") as to the fairness of the terms
and provisions of this Warrant to the Company and its shareholders. In such
circumstance, if the Appraiser, for any reason, is unable to issue an opinion
that the terms and provisions of this Warrant are fair to the Company and its
stockholders, then the consideration described in Section 8 hereof shall be
promptly returned to the Holder and, following such remittance, this Warrant
shall terminate and be of no further force and effect. The cost to obtain such
opinion shall be shared equally by the Company and the Holder; provided,
however, that the Holder shall not be obligated to pay more than $25,000 toward
the aggregate cost of obtaining such opinion and any opinion regarding the Class
B Warrant originally issued to SAHI, Inc. on March 15, 1994.
Section 11. Representations of the Company. The Company hereby
represents and warrants that (i) this Warrant and the issuance of Class A Shares
upon exercise hereof have been unanimously approved by the Company's trustees
subject only to obtaining the Approval and (ii) neither the authorization or
issuance of this Warrant, nor the issuance of the Class A Shares upon the
exercise thereof, violates the Company's Declaration of Trust or any other
document, agreement, statute, rule, regulation, judgement, decree or order to
which the Company or any of its assets or properties is subject.
Section 12. Share Legends. Each certificate issued for Class A
Shares pursuant hereto or issued in exchange or substitution for any
certificates so issued shall bear the following legend, unless at the time of
issuance of the certificate the shares represented by such certificate are
registered under the Securities Act of of 1933, as amended (the "Act") or the
Company has been provided with an opinion of counsel which shall be reasonably
satisfactory in form and substance to the Company, to the effect that the Class
A Shares are no longer restricted securities under the Act:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
they may not be sold or offered for sale in the absence of an
effective registraton statement under that Act as to said
securities or an opinion, in form and substance satisfactory
to the Company and given by counsel satisfactory to the Company,
that such registration is not required. The securities which are
evidenced by this Certificate were purchased under a warrant
dated March 15, 1994 issued by the Company and are benefitted
by and subject to the terms and conditions of such warrant.
Section 13. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon
<PAGE>
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed, or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 14. Notices. Except as otherwise expressly provided herein,
all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or three days after being deposited in the U.S. Mail (i) to the Company, at its
principal executive offices and (ii) to the Holder, at the Holder's address as
it appears in the records of the Company (unless otherwise indicated by the
Holder).
Section 15. Amendment and Waiver. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holders of Warrants representing a majority of the Class A Shares obtainable
upon exercise of this Warrant.
Section 14. Descriptive Headings; Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal law of the State of California,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
California.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its seal and to be dated as
of the date of issuance hereof.
ANGELES PARTICIPATING MORTGAGE
TRUST
By:/s/ Ronald J. Consiglio
------------------------------
Its: President
--------------------------
[Trust Seal]
Attest:
/s/ Ann Merguerian
- ----------------------------
Title: Secretary
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EXHIBIT I
EXERCISE AGREEMENT
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To: Dated:
------------------------- ------------------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_____), hereby agrees to subscribe for and purchase
_______ Class A Shares covered by such Warrant and makes payment herewith in
full therefor at the price per share provided by such Warrant.
The undersigned is acquiring such Class A Shares for its own account, for
investment purposes only, and not with a view towards the sale or other
distribution thereof, in whole or in part. The undersigned understands that the
Class A Shares issued pursuant to the Warrant have not been registered under the
Securities Act of 1933, as amended.
Signature:
-------------------------------
Address: -------------------------------
-------------------------------
-------------------------------
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_______) with respect to the number of shares of the
Class A Shares covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- ---------------------------- --------------------- -------------------------
Dated: Signature:
------------------------- -----------------------------------
Address: -----------------------------------
-----------------------------------
-----------------------------------
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EXHIBIT 99.2
THIS WARRANT WAS ORIGINALLY ISSUED ON MARCH 15, 1994 AND SUCH ISSUANCE WAS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
WARRANT MAY NOT BE TRANSFERRED IN VIOLATION OF SECTION 6 HEREOF. THIS WARRANT
MAY ONLY BE TRANSFERRED IF REGISTERED UNDER THE ACT UNLESS, IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, SUCH REGISTRATION IS UNNECESSARY
FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
ANGELES PARTICIPATING MORTGAGE TRUST
CLASS B SHARE PURCHASE WARRANT
------------------------------
Date of Issuance: March 15, 1994 Certificate No. W-002
FOR VALUE RECEIVED, Angeles Participating Mortgage Trust, a California
business trust (the "Company"), hereby grants to SAHI, Inc., a Delaware
corporation, or any transferee permitted by Section 6 hereof (the "Holder") the
right to purchase from the Company up to 2,500,000 shares of the Company's Class
B Shares (the "Class B Shares") at a price per share of $.01 (the "Exercise
Price"); provided, however, the Holder may only exercise this Warrant
contemporaneous with the exercise of the Company's Class A Warrant originally
issued to SAHI Partners on March 15, 1994 (the "Class A Warrant") and only with
respect to a number of Class B Shares equal to fifty percent of the number of
Class A Shares purchased pursuant to the exercise of the Class A Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Holder may exercise, in whole or in part
(but not as to a fractional Class B Share), the purchase rights represented by
this Warrant contemporaneous with the exercise of the Company's Class A Warrant;
provided, however, that the purchase rights represented by this Warrant (i) may
be exercised only if the shareholders of the Company shall have approved the
issuance of this Warrant and the issuance of any Class B Shares hereunder (the
"Approval") at the next annual shareholders meeting of the Company occurring
after the date hereof (the "Annual Meeting") and (ii) must be exercised, if at
all, on or before that date which is 120 days subsequent to the date of the
Annual Meeting.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C
below and substantially in the form set forth in Exhibit I hereto, executed
by the
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Person exercising all or any part of the purchase rights represented by
this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case
the Holder shall have complied with the provisions set forth in Section 6
and Section 7 hereof;
(d) a check payable to the Company or wire transfer of immediately
available funds to an account designated by the Company in an amount equal
to the product of the number of Class B Shares being purchased upon such
exercise multiplied by the Exercise Price (the "Aggregate Exercise Price");
(e) at the Company's option, the opinion described in Section 10
below; and
(f) all of the deliveries necessary for the exercise of the Class A
Warrant.
(ii) Certificates for Class B Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five business
days after the date of the Exercise Time. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been exercised
and shall within such five-day period, deliver such new warrant to the Holder.
(iii) The Class B Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Class B Shares at the Exercise Time.
(iv) The issuance of certificates for Class B Shares upon exercise
of this Warrant shall be made without charge to the Holder or the Purchaser for
costs incurred by the Company in connection with such exercise and the related
issuance of Class B Shares. Each Class B Share issuable upon exercise of this
Warrant shall upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any Class B Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Class B Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price.
<PAGE>
(vi) The Company shall assist and cooperate with the Holder or any
Purchaser required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company).
(vii) The Company shall take all such actions as may be necessary to
assure that all such Class B Shares may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which Class B Shares may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon each
such issuance); and
(viii) Upon the exercise of this Warrant, the Class B Shares shall
only be issued in the name of SAHI, Inc. or a transferee permitted by Section 6
hereof.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Exercise Agreement substantially in the form set forth in Exhibit I hereto shall
be executed by the Purchaser or transferee permitted by Section 6 hereof. Such
Exercise Agreement shall be dated the actual date of execution thereof.
Section 2. Liquidation Dividends. If the Company declares or pays a
dividend upon the Class B Shares payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except for a share dividend payable in Class B
Shares (a "Liquidating Dividend"), then the Company shall pay to the Holder at
the time of payment thereof the Liquidating Dividend which would have been paid
to such Holder on the Class B Shares had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of
Class B Shares entitled to such dividends are to be determined.
Section 3. Purchase Rights. If at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
shares, warrants, securities or other property pro rata to the record holders of
any class of its shares (the "Purchase Rights"), then the Holder shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which Holder could have acquired if Holder had held
the number of Class B Shares acquirable upon complete exercise of this Warrant
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Class B Shares are to be determined for the grant,
issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
below:
"Convertible Securities" means any stock, shares or securities
(directly or indirectly) convertible into or exchangeable or exercisable for
Class B Shares.
"Options" means any rights or options to subscribe for or purchase
Class B Shares or Convertible Securities.
3
<PAGE>
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Section 5. No Voting Rights: Limitations of Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to purchase Class B Shares, and no enumeration herein of
the rights or privileges of the Holder shall give rise to any liability of such
Holder for the Exercise Price of Class B Shares acquirable by exercise hereof or
as a shareholder of the Company.
Section 6. Warrant Transferability. This warrant and all rights
hereunder are not transferable, in while or in part, without the Company's prior
written consent, which consent shall not be unreasonably withheld or delayed as
to any transfer to an affiliate of SAHI Partners. Upon such consent, any
transfer of this Warrant, in whole or in part, shall be effected upon surrender
of this Warrant with a properly executed Assignment (in the form of Exhibit II
hereto) at the principal office of the Company. Each transferee of all or any
part of this Warrant, by taking and holding the same, consents to and agrees to
be bound by the provisions of this Warrant.
Section 7. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Holder at the time
of such surrender. The date the company initially issues this Warrant shall be
deemed to be the "Date of Issuance" hereof regardless of the number of times new
certificates representing the unexpired and exercised rights formerly
represented by this Warrant shall be issued. All Warrants representing portions
of the rights hereunder are referred to herein as the "Warrants."
Section 8. Consideration. The consideration received by the Company
for this Warrant is the sum of $1,000 cash, receipt of which is hereby
acknowledged by the Company, which amount will be applied against the first
$1,000 of the Aggregate Exercise Price for Class B Shares purchased pursuant
hereto. If the Approval is not received at the Annual Meeting, the Company
shall promtly refund to the Holder the consideration described in this Section
8 and, following such remittance, this Warrant shall be of no further force and
effect. Any new Warrants issued pursuant hereto shall not require the payment of
any additional consideration.
Section 9. Pre-Exercise Covenants of the Company. The Company, acting
through its trustees, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold the Annual Meeting
as soon as practicable following the date hereof. At such Annual Meeting the
Company will submit to its shareholders a proposal relating to the issuance of
this Warrant and the Class B Shares exercisable hereunder for their approval;
and
<PAGE>
(ii) include in the proxy statement distributed to shareholders prior
to the Annual Meeting the recommendation of the trustees that the shareholders
of the Company vote to approve the proposal relating to the issuance of this
Warrant and the Class B Shares exercisable hereunder, unless the trustees shall
have determined in good faith that such recommendation could reasonably be
expected to be a breach of the trustees' fiduciary duties under applicable law.
Section 10. Fairness Opinion. The Company shall have the right, as a
condition to the first issuance of any Class B Shares pursuant to this Warrant,
to obtain an opinion from a qualified, independent third party which may include
the Company's outside auditors (the "Appraiser") as to the fairness of the terms
and provisions of this Warrant to the Company and its shareholders. In such
circumstance, if the Appraiser, for any reason, is unable to issue an opinion
that the terms and provisions of this Warrant are fair to the Company and its
stockholders, then the consideration described in Section 8 hereof shall be
promptly returned to the Holder and, following such remittance, this Warrant
shall terminate and be of no further force and effect. The cost to obtain such
opinion shall be shared equally by the Company and the Holder; provided,
however, that the Holder shall not be obligated to pay more than $25,000 toward
the aggregate cost of obtaining such opinion and any opinion regarding the Class
A Warrant.
Section 11. Representations of the Company. The Company hereby
represents and warrants that (i) this Warrant and the issuance of Class B Shares
upon exercise hereof have been unanimously approved by the Company's trustees
subject only to obtaining the Approval and (ii) neither the authorization or
issuance of this Warrant, nor the issuance of the Class B Shares upon the
exercise thereof, violates the Company's Declaration of Trust or any other
document, agreement, statute, rule, regulation, judgement, decree or order to
which the Company or any of its assets or properties is subject.
Section 12. Share Legends. Each certificate issued for Class B
Shares pursuant hereto or issued in exchange or substitution for any
certificates so issued shall bear the following legend, unless at the time of
issuance of the certificate the shares represented by such certificate are
registered under the Securities Act of 1933, as amended (the "Act") or the
Company has been provided with an opinion of counsel which shall be reasonably
satisfactory in form and substance to the Company, to the effect that the Class
B Shares are no longer restricted securities under the Act:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
they may not be sold or offered for sale in the absence of an
effective registration statement under that Act as to said
securities or an opinion, in form and substance satisfactory
to the Company and given by counsel satisfactory to the Company,
that such registration is not required. The securities which are
evidenced by this Certificate were purchased under a warrant
dated March 15, 1994 issued by the Company and are benefitted
by and subject to the terms and conditions of such warrant.
Section 13. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be satisfactory)
of the ownership
<PAGE>
and the loss, theft, destruction or mutilation of any certificate evidencing
this Warrant, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Company (provided that if
the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, detroyed or mutilated
certificate.
Section 14. Notices. Except as otherwise expressly provided herein,
all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or three days after being deposited in the U.S. Mail (i) to the Company, at its
principal executive offices and (ii) to the Holder, at the Holder's address as
it appears in the records of the Company (unless otherwise indicated by the
Holder).
Section 15. Amendment and Waiver. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holders of Warrants representing a majority of the Class B Shares obtainable
upon exercise of this Warrant.
Section 16. Descriptive Headings; Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal law of the State of California,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
California.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its seal and to be dated as
of the date of issuance hereof.
ANGELES PARTICIPATING MORTGAGE
TRUST
By:/s/ Ronald J. Consiglio
------------------------------
Its: President
--------------------------
[Trust Seal]
Attest:
/s/ Ann Merguerian
- ----------------------------
Title: Secretary
-------------------
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
------------------
To:___________________________ Dated:___________________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_________), hereby agrees to subscribe for and
purchase _________ Class B Shares covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
The undersigned is acquiring such Class B Shares for its own account, for
investment purposes only, and not with a view towards the sale or other
distribution thereof, in whole or in part. The undersigned understands that the
Class B Shares issued pursuant to the Warrant have not been registered under the
Securities Act of 1933, as amended.
Signature: ________________________________
Address: ________________________________
________________________________
________________________________
<PAGE>
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-__________) with respect to the number of shares of the Class
B Shares covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
--------------------- ----------- -----------------
Dated:________________________ Signature: ________________________________
Address: ________________________________
________________________________
________________________________
<PAGE>
EXHIBIT 99.3
RESTATED SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT dated as of March 15, 1994, and restated as of April
27, 1994 by and among SAHI, Inc., a Delaware corporation ("SAHI, Inc."), SAHI
Partners, a Delaware general partnership ("SAHI Partners" and, together with
SAHI, Inc., "SAHI") and Angeles Participating Mortgage Trust, a California
Business Trust (the "Company").
WHEREAS, SAHI Partners owns 244,100 Class A shares of the Company ("Class A
Shares") and is the holder of a Warrant (the "Class A Warrant") for the right to
purchase an additional 5,000,000 Class A Shares which shares and Class A
Warrant, on a fully-diluted basis, represent 46.31 percent of the voting power
of the Company and, additionally, SAHI Partners owns 1,275,000 Class B shares of
the Company ("Class B Shares") which represent approximately 33 percent of the
voting power of the Company;
WHEREAS, SAHI, Inc. is the holder of a Warrant (the "Class B Warrant") for
the right to purchase an additional 2,500,000 Class B Shares which, if
exercised, would preserve the voting power of the Company held by the entirety
of the Class B Shares;
WHEREAS, the Class B Shares were previously owned by SAHI, Inc. and SAHI,
Inc. subsequently transferred the Class B Shares to SAHI Partners; and
WHEREAS, in order to induce the Company to issue the Class A Warrant to
SAHI Partners and the Class B Warrants to SAHI, Inc., SAHI Partners and SAHI,
Inc. agreed to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Protection of Cash Reserves. Each of SAHI Partners and SAHI,
Inc. agree that it shall take no action, directly or indirectly, which would
cause the cash or cash equivalent reserves of the Company to be reduced below
$2,000,000 at any time on or before December 31, 1994; below $1,000,000 at any
time on or before December 31, 1995; or below $500,000 at any time on or before
December 31, 1996 (including, without limitation, terminating or amending or
attempting to terminate or amend that certain Trust dated as of 11/23/93 by and
between the Company and Ronald J. Consiglio, as amended 3/14/94).
Section 2. Interested Transactions. Each of SAHI Partners and SAHI, Inc.
agree that during the three year period beginning on the date of the Company's
next annual meeting it shall take no action, directly or indirectly, which would
cause the Company to enter into any Interested Transactions (as defined below)
unless any such Interested Transaction has been approved by a majority of the
Independent Trustees (as defined below) of the Company.
Section 3. Independent Trustees. Each of SAHI Partners and SAHI, Inc. shall
take all actions within their powers, to cause the election of at least two
Independent Trustees
<PAGE>
to serve on the Company's Board of Trustees during the three year period
beginning on the date of the Company's next annual meeting; provided that in no
event shall SAHI Partners or SAHI, Inc. be obligated to take any action which
would prevent them from electing a majority of the entire Trustees on the
Company's Board of Trustees.
Section 4. Fairness Opinion Expenses. SAHI Partners and SAHI, Inc. jointly
and severally agree to reimburse the Company for fifty percent of the costs
incurred by the Company in securing the fairness opinions described in Section
10 of the Class A and Class B Warrants; provided, however, that such
reimbursement obligation shall not exceed $25,000 in the aggregate. SAHI
Partners and/or SAHI, Inc. shall make such reimbursement promptly upon receipt
of an itemized statement from the Company of such costs.
Section 5. Transfers. During the term of this Agreement, SAHI Partners and
SAHI, Inc. shall not transfer or undertake a series of transfers of Class A
Shares or Class B Shares which in the aggregate represent over 9% of the voting
power of the Company unless the transferees thereof agree to be bound by the
terms hereof pursuant to a written agreement in form and substance reasonably
acceptable to the Company.
Section 6. REIT Status. SAHI Partners and SAHI, Inc. will not intentionally
engage in any actions which jeopardize or cause the Company to violate its
qualification as a Real Estate Investment Trust under Part II, Subchapter M of
Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended.
Section 7. Definitions. The following terms have the meanings set forth
below:
"Interested Transactions" means to:
(a) merge, consolidate with, or otherwise acquire all or any
portion of the business, assets or securities of any SAHI Affiliate or
sell, transfer or assign any portion of the Company's business,
assets or securities to any SAHI Affiliate;
(b) make any loans or other advances of money to, or guarantee
with or for the benefit of, any SAHI Affiliate or any officer,
director or shareholder (both direct and indirect) of any SAHI
Affiliate;
(c) sell, lease, transfer or otherwise dispose of any property or
assets from, entertain or maintain any contract, agreement or
understanding with, or otherwise enter into, or be a party to, any
transaction with, any SAHI Affiliate or any officer, director, or
shareholder (both direct and indirect) of any SAHI Affiliate;
(d) take any actions (other than the entry into this Agreement,
the purchase of the Class A Warrant and the Class B Warrant, and the
consummation of the transactions contemplated herein and therein)
which would
<PAGE>
result in one or more publicly-traded classes of the Company's equity
securities no longer having the attributes of public ownership; or
(e) take any actions beneficial to any SAHI Affiliate which would
be detrimental to a material number of public shareholders of the
Company;
provided, however, the actions described in (a), (b) and (c) above
shall not constitute an Interested Transaction if (i) the action taken
has been determined by the Company's Board of Trustees to be pursuant
to the reasonable requirements of the Company's business and upon fair
and reasonable terms which are no less favorable to the Company than
would be obtained in a comparable arms-length transaction with an
independent third-party and (ii) the transaction involves less than
$500,000.
"Independent Trustees" shall means a Trustee who is (i) not an
officer, employee, agent, shareholders (direct or indirect) or
representative of the Company, SAHI Partners, SAHI, Inc., or any SAHI
Affiliate, (ii) not a spouse, sibling, lineal descendant, ancestor, aunt,
uncle or first cousin of any of the aforesaid Persons (including in-laws
and adopted relationships), and (iii) free of any relationship that would
interfere with the exercise of independent judgment, provided, however,
that Ronald J. Consiglio, J. D'Arcy Chisolm and Jack E. McDonald shall be
considered Independent Trustees hereunder.
"Affiliate" of an entity means a person which directly or indirectly
through one or more intermediaries control, or is controlled by, or is
under common control with, such entity.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Section 8. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective against the Company, SAHI Partners or SAHI, Inc. unless such
modification, amendment or waiver is approved in writing by the Company, SAHI
Partners and SAHI, Inc.
Section 9. Successors and Assigns. This Agreement will bind and inure to
the benefit of and be enforceable by (a) the Company and its successors and
assigns and (b) SAHI Partners and SAHI, Inc. and their respective successors and
assigns.
Section 10. Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
Section 11. Descriptive Headings; Interpretation. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part
<PAGE>
of or to affect the meaning or interpretation of this Agreement. The use of the
word "including" in this Agreement shall be by way of example rather than by
limitation.
Section 12. Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to conflicts of law principles.
Section 13. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and will be deemed to have been duly given when delivered
personally to the recipient, sent to the recipient by reputable express courier
(charges prepaid) or mailed by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the addresses indicated below:
To the Company:
Angeles Participating Mortgage Trust
2049 Century Park East
Suite 4080
Los Angeles, California 90067
Facsimile: (310) 772-0139
Attention: Ronald J. Consiglio
With a copy to:
Katten Muchin Zavis & Weitzman
1990 Avenue of the Stars
Suite 1400
Los Angeles, CA 99067
Facsimile: (310) 788-4471
Attention: James K. Baer, Esq.
To SAHI Partners or SAHI, Inc.:
c/o Starwood Capital Group, L.P.
228 Saugatuck Avenue
Westport, CT 06880
Facsimile: (203) 221-4647
Attention: Madison Grose, Esq.
<PAGE>
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Facsimile: (312) 861-2200
Attention: Gary Silverman, Esq.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
Section 14. Preamble; Preliminary Recital. The Preliminary Recitals
set forth in the Preamble hereto are hereby incorporated and made part of this
Agreement.
Section 15. Entire Agreement. This Agreement and the Class A and Class
B Warrants set forth the entire understanding of the parties, and supersede and
preempt all prior oral or written understandings and agreements with respect to
the subject matter hereof, including the Shareholders Agreement dated March 15,
1994.
Section 16. Third Party Beneficiaries. It is specifically contemplated
that the public shareholders of the Company be third party beneficiaries of this
Agreement.
Section 17. Termination. This Agreement will terminate automatically
and be of no further force and effect upon the earlier of (i) the third
anniversary of the Company's next annual meeting, or (ii) the expiration or
termination (without exercise) of the Class A and Class B Warrants.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date set forth above.
ANGELES PARTICIPATING MORTGAGE TRUST
By: /s/ Ronald J. Consiglio
-------------------------------
Its: President
-------------------------
SAHI PARTNERS
By: SAHI, Inc., a general partner
By: /s/ Madison F. Grose
-------------------------
Its: Vice President
--------------------
SAHI, Inc.
By: /s/ Madison F. Grose
-------------------------------
Its: Vice President
--------------------------
<PAGE>
EXHIBIT 99.4
ASSIGNMENT
----------
FOR VALUE RECEIVED, SAHI PARTNERS hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant (Certificate No.
W-001) with respect to the number of shares of the Class A Shares covered
thereby set forth below, unto:
Names of Assignee Address No. of Shares
- --------------------------------- --------------------- ---------------------
Starwood Mezzanine Investors, L.P. Three Pickwick Plaza 5,000,000
Suite 250
Greenwich, CT 06830
Dated as of: March 15, 1996 Signature: /s/ MADISON F. GROSE
-------------------------------
Address: Three Pickwick Plaza
Suite 250
Greenwich, CT 06830
ACKNOWLEDGEMENT OF ASSIGNMENT
-----------------------------
Angeles Participating Mortgage Trust hereby acknowledges and consents to
the foregoing assignment of the Warrant by SAHI Partners to Starwood Mezzanine
Investors, L.P. and acknowledges that the assignment has been effected in
accordance with Section 6 of the Class A Share Purchase Warrant.
ANGELES PARTICIPATING MORTGAGE TRUST
/s/ RONALD J. CONSIGLIO
------------------------------
By: Ronald J. Consiglio, President
<PAGE>
EXHIBIT 99.5
AMENDMENT NO. 1 TO RESTATED SHAREHOLDERS AGREEMENT
--------------------------------------------------
This Amendment No. 1 (this "Amendment") to the Shareholders Agreement
dated as of March 15, 1994 and restated as of April 27, 1994, is entered into
this 15th day of March, 1996 by and among SAHI, Inc., a Delaware corporation
("SAHI, Inc."), SAHI Partners, a Delaware general partnership, Starwood
Mezzanine Investors, L.P., a Delaware limited partnership ("Starwood Mezzanine")
and Angeles Participating Mortgage Trust, a California Business Trust (the
"Company"), with reference to the following facts:
WHEREAS, SAHI Partners, SAHI, Inc. and the Company entered into that
certain Shareholders Agreement dated as of March 15, 1994 and restated as of
April 27, 1994 ("Shareholders Agreement");
WHEREAS, SAHI Partners has assigned its Class A Warrant to Starwood
Mezzanine; and
WHEREAS, SAHI Partners, SAHI, Inc. and the Company hereby deem it to
be in their respective best interests to amend the Shareholders Agreement as set
forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Any initially capitalized term not defined herein shall have the
meaning ascribed thereto in the Shareholders Agreement.
2. Starwood Mezzanine hereby agrees that, upon the full or partial
exercise of the Class A Warrant, it shall become a party to the Shareholders
Agreement and further agrees to be bound by all of the terms and conditions of
the Agreement applicable to SAHI Partners and SAHI, Inc.
3. Section 7(d) of the Shareholders Agreement shall be deleted in
its entirety and replaced with the following:
"(d) take any actions (other than the (1) entry into this Agreement,
(2) the purchase of the Class A Warrant and the Class B Warrant and
the consummation of the transactions contemplated herein and therein
and (3) the issuance of Class A Shares upon the exchange of Starwood
Mezzanine's limited partnership interests in APT Limited Partnership
("Partnership") pursuant to the partnership agreement of the
Partnership and (4) the required issuance of the Class B Shares
pursuant to the Declaration of Trust of the Company upon the issuance
of Class A Shares, and the consummation of the transactions
contemplated herein and therein) which would result in one or more
publicly-traded classes of the Company's equity securities no longer
having the attributes of public ownership; or"
4. Section 17 of the Shareholders Agreement is hereby amended to
read as follows in its entirety:
"Section 17. Termination. This Agreement will terminate automatically
and be of no further force and effect on the third anniversary of the
Company's 1996 Annual Meeting of Shareholders."
5. Except as amended by this Amendment, the Agreement shall continue
in full force and effect.
<PAGE>
6. This Amendment may be executed in multiple counterparts, each of
which will be an original and all of which taken together will constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the date set forth above.
ANGELES PARTICIPATING MORTGAGE TRUST
By: /s/ Ronald J. Consiglio
---------------------------------
Ronald J. Consiglio, President
SAHI PARTNERS
By: SAHI, Inc., a general partner
By: /s/ Madison F. Grose
-----------------------------
Madison F. Grose,
Vice President
SAHI, INC.
By: /s/ Madison F. Grose
---------------------------------
Madison F. Grose,
Vice President
STARWOOD MEZZANINE INVESTORS, L.P.
By: STARWOOD CAPITAL GROUP I, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS
II, INC., general partner
By: /s/ Madison F. Grose
Name: Madison F. Grose
Title: Executive Vice President
<PAGE>
EXHIBIT 99.6
____________________________________________________
LIMITED PARTNERSHIP AGREEMENT
OF
APMT LIMITED PARTNERSHIP
____________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS................................................... 1
1.1 Definitions................................................... 1
"Accountants"................................................. 1
"Act"......................................................... 1
"Adjusted Capital Account Deficit"............................ 1
"Administrative Expenses"..................................... 1
"Affected Gain"............................................... 1
"Affiliate"................................................... 2
"Agreement"................................................... 2
"APT"......................................................... 2
"Audited Financial Statements"................................ 2
"Average Share Closing Price"................................. 2
"Bankruptcy".................................................. 2
"Business Day"................................................ 2
"Capital Account"............................................. 2
"Capital Contribution"........................................ 3
"Certificate"................................................. 3
"Certificates"................................................ 3
"Class A Warrant"............................................. 3
"Code"........................................................ 3
"Consent of the Limited Partners"............................. 4
"Contributed Property"........................................ 4
"Control"..................................................... 4
"Declaration of Trust"........................................ 4
"Depreciation"................................................ 4
"Diversified Portfolio"....................................... 4
"Entity"...................................................... 5
"ERISA"....................................................... 5
"Exchange Rights Agreement"................................... 5
"Formation Agreement"......................................... 5
"GAAP"........................................................ 5
"General Partner"............................................. 5
"Gross Asset Value"........................................... 5
"Immediate Family"............................................ 6
"Indemnitee".................................................. 6
"Lien"........................................................ 6
"Limited Partner Representative".............................. 6
"Limited Partners"............................................ 7
"Liquidating Trustee"......................................... 7
"Majority-In-Interest of the Limited Partners"................ 7
"Minimum Gain Attributable to Partner Nonrecourse Debt"....... 7
"Net Cash Flow"............................................... 7
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Net Income".................................................. 7
"Net Loss".................................................... 7
"Nonrecourse Deductions"...................................... 8
"Nonrecourse Liabilities"..................................... 8
"Partner Nonrecourse Debt".................................... 8
"Partner Nonrecourse Deductions".............................. 8
"Partners".................................................... 8
"Partnership"................................................. 8
"Partnership Interest"........................................ 8
"Partnership Minimum Gain".................................... 9
"Partnership Record Date"..................................... 9
"Percentage Interest"......................................... 9
"Person"...................................................... 9
"Property".................................................... 9
"Purchase Rights"............................................. 9
"Registration Rights Agreement"............................... 9
"Regulations"................................................. 9
"Regulatory Allocations"...................................... 9
"REIT"........................................................ 9
"REIT Compliance Expenses".................................... 9
"REIT Expenses"............................................... 9
"REIT Requirements"........................................... 10
"Restricted Entity"........................................... 10
"Rights"...................................................... 10
"SAHI"........................................................ 10
"SAHI Group".................................................. 10
"SAHI Nominees"............................................... 10
"SCG"......................................................... 10
"SEC"......................................................... 10
"Section 704(c) Tax Items".................................... 10
"Share Closing Price"......................................... 11
"Shares"...................................................... 11
"Starwood Mezzanine".......................................... 11
"Starwood Partnership Agreement".............................. 11
"Tax Items"................................................... 11
"Tax Payment Loan"............................................ 11
"Tax Payment Loan Date"....................................... 11
"UBTI"........................................................ 11
"Units"....................................................... 11
"Withholding Tax Act"......................................... 11
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 2 FORMATION AND BUSINESS OF THE PARTNERSHIP..................... 11
2.1 Formation..................................................... 11
2.2 Name.......................................................... 12
2.3 Character of the Business..................................... 12
2.4 Location of Principal Place of Business....................... 12
2.5 Registered Agent and Registered Office........................ 12
ARTICLE 3 TERM.......................................................... 13
3.1 Commencement.................................................. 13
3.2 Dissolution................................................... 13
ARTICLE 4 CAPITAL CONTRIBUTIONS......................................... 13
4.1 Capital Contributions: Units................................. 13
4.2 Purchase Rights............................................... 15
4.3 Redemption.................................................... 15
4.4 No Third Party Beneficiaries.................................. 15
ARTICLE 5 INDEMNIFICATION............................................... 16
5.1 Indemnification of General Partner............................ 16
5.2 Indemnification of Limited Partners........................... 17
5.3 Notice of Claims.............................................. 17
5.4 Third Party Claims............................................ 18
ARTICLE 6 ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING
MATTERS....................................................... 19
6.1 Allocations................................................... 19
(a) Allocation of Net Income and Net Loss.................... 19
(b) Special Allocations...................................... 19
(c) Tax Allocations.......................................... 22
6.2 Distributions................................................. 23
6.3 Books of Account.............................................. 23
6.4 Reports....................................................... 23
6.5 Tax Elections and Returns..................................... 23
6.6 Tax Matters Partner........................................... 24
6.7 Withholding Payments Required by Law.......................... 25
ARTICLE 7 RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER........ 26
7.1 Powers and Duties of General Partner.......................... 26
7.2 [Intentionally Left Blank].................................... 30
7.3 Reimbursement of the General Partner.......................... 30
7.4 Contracts with Affiliates..................................... 31
7.5 Title to Partnership Assets................................... 31
7.6 Reliance by Third Parties..................................... 31
7.7 Liability of the General Partner.............................. 32
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
7.8 Other Matters Concerning the General Partner.................. 33
7.9 Operation in Accordance with REIT Requirements................ 33
ARTICLE 8 DISSOLUTION, LIQUIDATION AND WINDING-UP....................... 34
8.1 Accounting.................................................... 34
8.2 Documentation of Liquidation.................................. 35
ARTICLE 9 TRANSFER...................................................... 35
9.1 General Partner............................................... 35
9.2 Transfers by Limited Partners................................. 36
9.3 Certain Restrictions on Transfer.............................. 37
9.4 Effective Dates of Transfers.................................. 38
9.5 Transfer...................................................... 38
ARTICLE 10 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS................ 39
10.1 No Participation in Management................................ 39
10.2 Bankruptcy of a Limited Partner............................... 39
10.3 No Withdrawal................................................. 39
10.4 Conflicts..................................................... 39
10.5 Provision of Information...................................... 40
10.6 Limited Partner Representative................................ 41
10.7 Power of Attorney............................................. 41
10.8 Ownership of Shares........................................... 42
10.9 Waiver of Fiduciary Duty...................................... 42
ARTICLE 11 AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS.................. 43
11.1 Amendments.................................................... 43
11.2 Meetings of the Partners; Notices to Partners................. 44
ARTICLE 12 GENERAL PROVISIONS............................................ 45
12.1 No Liability of Directors and Others.......................... 45
12.2 Notices....................................................... 45
12.3 Controlling Law............................................... 45
12.4 Execution of Counterparts..................................... 45
12.5 Severability.................................................. 46
12.6 Entire Agreement.............................................. 46
12.7 Paragraph Headings............................................ 46
12.8 Gender, Etc................................................... 46
12.9 Number of Days................................................ 46
12.10 Partners Not Agents........................................... 46
12.11 Assurances.................................................... 46
12.12 Waiver of Partition........................................... 46
12.13 Angeles Participating Mortgage Trust.......................... 46
</TABLE>
(iv)
<PAGE>
THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. REFERENCE IS MADE TO
ARTICLE 9 OF THIS AGREEMENT FOR PROVISIONS RELATING TO VARIOUS
RESTRICTIONS ON THE SALE OR OTHER TRANSFER OF THESE INTERESTS.
LIMITED PARTNERSHIP AGREEMENT
OF
APMT LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is made and entered
into this 26th day of September, 1996, by and between ANGELES PARTICIPATING
MORTGAGE TRUST, a California business trust, as general partner, and STARWOOD
MEZZANINE INVESTORS, L.P., a Delaware limited partnership, as limited partner,
pursuant to the provisions of the Delaware Revised Uniform Limited Partnership
Act.
A. Starwood Mezzanine is the owner of certain pass-through participation
certificates more specifically described on Exhibit A hereto (the
"Certificates"), which it has agreed to contribute in their entirety to the
Partnership pursuant to the Formation Agreement.
B. APT has agreed to contribute Four Hundred Thousand Dollars ($400,000),
in cash, to the Partnership, plus or minus prorations, if any, pursuant to the
Formation Agreement.
C. Starwood Mezzanine and APT have agreed to enter into this Agreement
and form the Partnership pursuant to the Formation Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. Except as otherwise herein expressly provided, the
following terms and phrases shall have the meanings as set forth below:
"ACCOUNTANTS" shall mean the national firm or firms of independent
certified public accountants selected by the General Partner on behalf of
the Partnership to audit the books and records of the Partnership and to
prepare statements and reports in connection therewith.
"ACT" shall mean the Delaware Revised Limited Partnership Act, as the
same may hereafter be amended from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Partner or holder of Units other than the General Partner, the deficit
balance, if any, in such holder's Capital Account as of the end of any
relevant fiscal year and after giving effect to the following adjustments:
(a) credit to such Capital Account any amounts which such holder
is obligated or treated as obligated to restore with respect to any
deficit balance in such Capital Account pursuant to Section 1.704-
1(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to
restore with respect to any deficit balance pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the requirements of the alternate test for economic effect
contained in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
"ADMINISTRATIVE EXPENSES" shall mean: (a) all administrative and
operating costs and expenses of the Partnership; (b) those administrative
costs and expenses of the General Partner, including, but not limited to,
salaries and other remunerations paid to trustees, officers and employees
of the General Partner and accounting and legal expenses undertaken by the
General Partner but only to the extent that the same were incurred directly
on behalf or for the benefit of the Partnership; and (c) to the extent not
included in clause (b) above and only to the extent permitted by Section
7.3(c) below, REIT Expenses and REIT Compliance Expenses.
"AFFECTED GAIN" shall have the meaning set forth in Section 6.1(c)(ii)
hereof.
<PAGE>
"AFFILIATE" shall mean, with respect to any Partner (or as to any
other Person the Affiliates of whom are relevant for purposes of any of the
provisions of this Agreement): (a) any member of the Immediate Family of
such Partner or Person; (b) any trustee or beneficiary of a Partner which
is a trust; (c) any trust for the benefit of any Person referred to in the
preceding clauses (a) and (b); or (d) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by,
or is under common Control with, any Partner, or Person referred to in the
preceding clauses (a) through (c).
"AGREEMENT" shall mean this Limited Partnership Agreement, as amended,
modified, supplemented or restated from time to time, as the context
requires.
"APT" shall mean Angeles Participating Mortgage Trust, a California
business trust.
"AUDITED FINANCIAL STATEMENTS" shall mean financial statements
(balance sheets, statement of income, statement of partners' equity and
statement of cash flows) prepared in accordance with GAAP and accompanied
by an independent auditor's report containing an opinion thereon.
"AVERAGE SHARE CLOSING PRICE" shall mean the average Share Closing
Price for the ten (10) trading day period ending one day prior to the date
specified.
"BANKRUPTCY" shall mean, with respect to any Person: (a) the
commencement by such Person of any petition, case or proceeding seeking
relief under any provision or chapter of the federal Bankruptcy Code or
any other federal or state law relating to insolvency, bankruptcy or
reorganization; (b) an adjudication that such Person is insolvent or
bankrupt; (c) the entry of an order for relief under the federal Bankruptcy
Code with respect to such Person; (d) the filing of any such petition or
the commencement of any such case or proceeding against such Person, unless
such petition and the case or proceeding initiated thereby are dismissed
within ninety (90) days from the date of such filing; or (e) the filing of
an answer by such Person admitting the allegations of any such petition.
"BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or a
day on which banking institutions in the State of California are authorized
or obligated by law or executive order to close.
"CAPITAL ACCOUNT" shall mean, as to any Partner or holder of Units,
a book account maintained in accordance with the following provisions:
(a) to each Partner's or holder of Unit's Capital Account there
shall be credited the amount of cash contributed by the Partner or
holder, the initial Gross Asset Value of any other asset contributed
by such Partner or holder to the capital of the Partnership (net of
liabilities secured by contributed property that the Partnership
assumes or takes subject to), such Partner's or holder's
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<PAGE>
distributive share of Net Income and any other items of income or gain
allocated to such Partner or holder, the amount of any Partnership
liabilities assumed by the Partner or holder or secured by distributed
assets that such Partner or holder takes subject to and any other
items in the nature of income or gain that are allocated to such
Partner or holder pursuant to Section 6.1 hereof; and
(b) to each Partner's or holder of Unit's Capital Account there
shall be debited the amount of cash distributed to the Partner or
holder, the Gross Asset Value of any Partnership asset distributed to
such Partner or holder pursuant to any provision of this Agreement
(net of liabilities assumed by the Partner or holder or secured by
the assets distributed to such Person), such Partner's or holder's
distributive share of Net Losses and any other items in the nature
of expenses or losses that are allocated to such Partner pursuant to
Section 6.1 hereof.
In the event that a Partner's Partnership Interest or a holder of Unit's
Units or portion thereof is transferred within the meaning of Section
1.704-1(b)(2)(iv)(f) of the Regulations, the transferee shall succeed to
the Capital Account of the transferor to the extent that it relates to
the Partnership Interest, Units or portion thereof so transferred. In the
event that the Gross Asset Values of Partnership assets are adjusted, as
contemplated in paragraph (b) or (c) of the definition of "Gross Asset
Value", the Capital Accounts of the Partners and holders of Units shall be
adjusted to reflect the aggregate net adjustments as if the Partnership
sold all of its properties for their fair market values and recognized
gain or loss for federal income tax purposes equal to the amount of such
aggregate net adjustment. This definition of Capital Accounts is intended
to comply with the maintenance of capital account provisions of Section
1.704-1(b) of the Regulations and shall be interpreted and applied in a
manner consistent therewith.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Partner,
the amount of cash and the initial Gross Asset Value of any Contributed
Property (net of liabilities to which such property is subject).
"CERTIFICATE" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Delaware
Secretary of State, as amended from time to time in accordance with the
terms of this Agreement and the Act.
"CERTIFICATES" shall have the meaning set forth in Recital B of this
Agreement.
"CLASS A WARRANT" means the warrant issued to SAHI Partners, a
Delaware limited partnership on March 15, 1994 and subsequently assigned
to Starwood Mezzanine for the purchase of up to 5,000,000 Shares, subject
to adjustment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision
of future law.
3
<PAGE>
"CONSENT OF THE LIMITED PARTNERS" shall mean the written consent of
a Majority-In-Interest of the Limited Partners given in accordance with
Section 11.2 hereof, which consent shall be obtained prior to the taking
of any action for which it is required by this Agreement and may be given
or withheld by a Majority-In-Interest of the Limited Partners, unless
otherwise expressly provided herein, in their sole and absolute discretion.
"CONTRIBUTED PROPERTY" shall mean any property or other asset in such
form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership with respect to the Partnership
Interest held by each Partner.
"CONTROL" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or otherwise to select, or have the power to
remove and then select, a majority of those persons exercising governing
authority over an Entity. In the case of a limited partnership, the sole
general partner, all of the general partners to the extent each has equal
management control and authority, or the managing general partner or
managing general partners thereof shall be deemed to have control of such
partnership and, in the case of a trust, any trustee thereof or any Person
having the right to select any such trustee shall be deemed to have control
of such trust.
"DECLARATION OF TRUST" shall mean the Declaration of Trust of APT,
originally made and entered into as of April 15, 1988, as restated as of
July 18, 1988, as further restated as of September 26, 1996, and as the
same may be amended, modified, supplemented, restated or superseded from
time to time after the date hereof.
"DEPRECIATION" shall mean, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation or
amortization, as the case may be, allowed or allowable for federal income
tax purposes in respect of such asset for such fiscal year or other period,
except that if the Gross Asset Value of an asset differs from its adjusted
tax basis for federal income tax purposes at the beginning of such fiscal
year or other period, Depreciation shall be an amount that bears the same
ratio to such Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such fiscal year or
other period bears to such beginning adjusted tax basis and if such
adjusted tax basis is zero, the Depreciation shall be based on the method
of depreciation, amortization or other cost recovery deduction utilized in
preparing the financial statements of the Partnership.
"DIVERSIFIED PORTFOLIO" shall mean and include (i) mortgage loans to
unrelated entities and securities collateralized, in whole or in part, by
mortgage loans, as well as direct and indirect and controlling and non-
controlling investments in real estate and real estate-related assets
including through any Entity or direct ownership; (ii) direct or indirect
interests in short term, medium and long-term real estate-related debt
securities and mortgage interests, which may include warrants, equity
participations or similar rights incidental to a debt investment, excluding
interests in which the borrowers are
4
<PAGE>
affiliated with APT, (iii) purchase money loans with respect to assets sold
by APT, and (iv) non-performing and sub-performing debt for the purpose of
either restructuring the same to performing debt or of obtaining primary
management rights over or equity interests in the underlying assets
securing such debt, in each case, subject to Section 7.1. The Diversified
Portfolio may include controlling or non-controlling equity ownership
positions in any general category of real estate assets, including without
limitation, office, industrial, mini-storage and residential improvements
to land, excluding any positions prohibited by Section 7.1 hereof.
"ENTITY" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, real estate investment trust or association.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and as interpreted by the applicable
regulations thereunder (or any corresponding provisions of succeeding laws
and regulations).
"EXCHANGE RIGHTS AGREEMENT" shall mean the Exchange Rights Agreement,
dated the date hereof, by and between APT and Starwood Mezzanine.
"FORMATION AGREEMENT" shall mean the Formation Agreement, dated
September 26, 1996, by and between APT and Starwood Mezzanine.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time.
"GENERAL PARTNER" shall mean APT, its duly admitted successors and
assigns and any other Person who is a general partner of the Partnership
at the time of reference thereto.
"GROSS ASSET VALUE" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes,
except as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of
such asset at the time of its contribution as reasonably determined by
the General Partner and the contributing Partner;
(b) the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, immediately prior to
the following events:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing
Partner as consideration for a Partnership Interest;
5
<PAGE>
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property
as consideration for the redemption of a Partnership
Interest;
(iii) the liquidation of the Partnership within the meaning
of Section 1.704-1(b)(2)(ii)(g) of the Regulations;
and
(iv) any other event as to which the General Partner
reasonably determines that an adjustment is necessary
or appropriate to reflect the relative economic
interests of the Partners.
(c) the Gross Asset Values of Partnership assets distributed
to any Partner shall be the gross fair market values of such assets
as reasonably determined by the General Partner as of the date of
distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the
Code, but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Section 1.704-
1(b)(2)(iv)(m) of the Regulations; provided, however, that Gross Asset
Values shall not be adjusted pursuant to this paragraph to the extent
that the General Partner reasonably determines that an adjustment
pursuant to paragraph (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation
taken into account with respect to the Partnership's assets for purposes
of computing Net Income and Net Loss. Any adjustment to the Gross Asset
Values of Partnership property shall require an adjustment to the Partner's
Capital Accounts.
"IMMEDIATE FAMILY" shall mean, with respect to any Person, such
Person's spouse (then current or former), parents, parents-in-law,
descendants, brothers and sisters (whether by whole or half-blood), first
cousins, brothers-in-law and sisters-in-law (whether by whole or half-
blood), ancestors and lineal descendants.
"INDEMNITEE" shall mean any Person who is, or at any time on or after
the date hereof was a (i) General Partner or (ii) Affiliate, employee,
trustee, director, officer, stockholder, agent or Liquidating Trustee of
the Partnership or the General Partner.
"LIEN" shall mean any liens, security interests, mortgages, deeds of
trust, pledges, options, rights of first offer or first refusal and any
other similar encumbrances of any nature whatsoever.
"LIMITED PARTNER REPRESENTATIVE" shall have the meaning set forth in
Section 10.6 hereof.
6
<PAGE>
"LIMITED PARTNERS" shall mean those Persons listed under the heading
"Limited Partners" on the signature page hereto in their respective
capacities as limited partners of the Partnership, their permitted
successors or assigns as limited partners hereof, and any Person who, at
the time of reference thereto, is a limited partner of the Partnership.
"LIQUIDATING TRUSTEE" shall mean such individual or Entity which is
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, provided that such Liquidating Trustee agrees in writing
to be bound by the terms of this Agreement. The Liquidating Trustee shall
be empowered to give and receive notices, reports and payments in
connection with the dissolution, liquidation and/or winding up of the
Partnership and shall hold and exercise such other rights and powers
granted to the General partner herein or under the Act as are necessary or
required to conduct the winding-up and liquidation of the Partnership's
affairs and to authorize all parties to deal with the dissolution,
liquidation and/or winding-up of the Partnership.
"MAJORITY-IN-INTEREST OF THE LIMITED PARTNERS" shall mean Limited
Partner(s) who hold in the aggregate more than fifty (50%) percent of the
Percentage Interests then allocable to and held by the Limited Partners,
as a class (but excluding any Partnership Interests acquired by the General
Partner or any Person controlled by the General Partner or any Person
holding as a nominee of the General Partner or of any Person controlled by
the General Partner).
"MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT" shall mean
"partner nonrecourse debt minimum gain" as determined in accordance with
Section 1.704-2(i)(2) of the Regulations.
"NET CASH FLOW" shall mean, with respect to any fiscal period of the
Partnership, the excess, if any, of "Receipts" over "Expenditures". For
purposes hereof, the term "Receipts" means the sum of all cash receipts of
the Partnership from all sources for such period and any amounts held as
reserves as of the last day of such period, which the General Partner
reasonably deems to be in excess of reserves as determined below. The
term "Expenditures" means the sum of (a) all cash expenditures of the
Partnership for any purpose, including operating expenses and capital
expenditures, for such period, (b) the amount of all payments of principal,
premium, if any, and interest on account of any indebtedness of the
Partnership and (c) such additions to cash reserves as of the last day of
such period as the General Partner deems necessary or appropriate for any
capital, operating or other expenditure, including, without limitation,
contingent liabilities; but the term "Expenditures" shall not include
amounts paid from cash reserves previously established by the Partnership.
"NET INCOME" or "NET LOSS" shall mean for each fiscal year, or other
applicable period, an amount equal to the Partnership's net income or loss
for such year or period as determined for federal income tax purposes by
the Accountants, determined in accordance with Section 703(a) of the Code
(for this purpose, all items of income, gain, loss or deduction required to
be stated separately pursuant to Section 703(a) of the Code
7
<PAGE>
shall be included in taxable income or loss), with the following
adjustments: (a) by including as an item of gross income any tax-exempt
income received by the Partnership; (b) by treating as a deductible expense
any expenditure of the Partnership described in Section 705(a)(2)(B) of the
Code (including amounts paid or incurred to organize the Partnership
(unless an election is made pursuant to Section 709(b) of the Code) or to
promote the sale of interests in the Partnership and by treating deductions
for any losses incurred in connection with the sale or exchange of
Partnership property disallowed pursuant to Section 267(a)(1) or Section
707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the
Code); (c) in lieu of depreciation, depletion, amortization and other cost
recovery deductions taken into account in computing total income or loss,
there shall be taken into account Depreciation; (d) gain or loss resulting
from any disposition of Partnership property with respect to which gain or
loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of such property rather than its
adjusted tax basis; (e) in the event of an adjustment of the Gross Asset
Value of any Partnership asset which requires that the Capital Accounts of
the Partnership be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f)
and (m) of the Regulations, the amount of such adjustment is to be taken
into account as additional Net Income or Net Loss pursuant to Section 6.1
hereof; and (f) excluding any items specially allocated pursuant to Section
6.1(b) hereof.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Sections
1.704-2(b)(1) and (c) of the Regulations and shall be determined in
accordance with Section 1.704-2(c) of the Regulations.
"NONRECOURSE LIABILITIES" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth
in Section 1.704-2(i)(2) of the Regulations and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt shall
be determined in accordance with the rules of Section 1.704-2(i) of the
Regulations.
"PARTNERS" shall mean the General Partner and the Limited Partners,
their duly admitted successors or assigns, or any Person who is a partner
of the Partnership at the time of reference thereto.
"PARTNERSHIP" shall mean the limited partnership formed under the Act
pursuant to this Agreement and any successor thereto.
"PARTNERSHIP INTEREST" shall mean the ownership interest of a Partner
in the Partnership from time to time, including each Partner's Percentage
Interest and such Partner's Units.
8
<PAGE>
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations and the amount of Partnership Minimum Gain
(and any net increase or decrease thereof) for a fiscal year or other
period shall be determined in accordance with the rules of Section 1.704-
2(d) of the Regulations.
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for distribution of Net Cash Flow pursuant to Section 6.2
hereof, which record date shall be the last day of the calendar month
preceding the month in which such distribution is made.
"PERCENTAGE INTEREST" shall mean, with respect to any Partner, the
percentage ownership interest of such Partner in such items of the
Partnership as to which the term "Percentage Interests" is applied in this
Agreement. The Percentage Interest of a Partner shall be equal to the
percentage obtained by dividing (a) the number of Units held by such
Partner (including Units held by assignees of such Partner who have not
been admitted as Partners) by (b) the total number of issued and
outstanding Units.
"PERSON" shall mean any natural person or Entity.
"PROPERTY" shall mean any property acquired by or contributed to the
Partnership or any property owned by an Entity in which the Partnership has
an ownership interest.
"PURCHASE RIGHTS" shall have the meaning set forth in Section 4.3
hereof.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated the date hereof, by and between APT and Starwood
Mezzanine.
"REGULATIONS" shall mean the income tax regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REGULATORY ALLOCATIONS" shall have the meaning set forth in Section
6.1(b)(viii) hereof.
"REIT" shall mean a real estate investment trust as defined in Section
856 of the Code.
"REIT COMPLIANCE EXPENSES" shall mean (a) costs and expenses
associated with the preparation and filing of any periodic reports by
the General Partner under federal, state or local laws or regulations,
including filings with the SEC and (b) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations
promulgated by any regulatory body, including the SEC.
"REIT EXPENSES" shall mean (a) costs and expenses relating to the
continuity of existence of the General Partner, including taxes (other
than the General Partner's federal and state income and franchise taxes,
if any), fees and assessments associated therewith,
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any and all costs, expenses or fees payable to any director or trustee of
the General Partner, (b) to the extent funded by the General Partner for
payment by the Partnership, costs and expenses relating to any offer or
registration of securities by the General Partner the net proceeds of which
are to be contributed or loaned to the Partnership and all statements,
reports, fees and expenses incidental thereto, including underwriting
discounts, selling commissions and placement fees applicable to any such
offer of securities, (c) Registration Expenses (as defined in the
Registration Rights Agreement), and (d) costs and expenses incurred in
connection with the listing of the Shares on the American Stock Exchange
or any other national securities exchange or national market system.
"REIT REQUIREMENTS" shall mean the requirements for the General
Partner to (a) qualify as a REIT under the Code and Regulations and (b)
avoid any federal income or excise tax liability. "REIT Requirements"
shall also include the ownership limitation provisions set forth in Section
6.13 of the Declaration of Trust.
"RESTRICTED ENTITY" shall mean any "employee benefit plan" as defined
in and subject to ERISA, any "plan" as defined in and subject to Section
4975 of the Code, or any entity any portion or all of the assets of which
are deemed pursuant to United States Department of Labor Regulation Section
2510.3-101 or otherwise pursuant to ERISA or the Code to be, for purposes
of the fiduciary standards or the prohibited transaction provisions of
ERISA or Section 4975 of the Code, assets of any such "employee benefit
plan" or "plan" which invests in such entity.
"RIGHTS" shall mean the rights of certain Limited Partners set forth
in the Exchange Rights Agreement or the Registration Rights Agreement. No
provision of this Agreement shall be interpreted as granting any Partner or
holder of Units any Rights or any rights or interest in or to the Exchange
Rights Agreement or the Registration Rights Agreement.
"SAHI" shall mean SAHI Partners, a Delaware limited partnership, SAHI
Inc., a Delaware corporation and Starwood Mezzanine.
"SAHI GROUP" shall mean SAHI, the SAHI Nominees and their
representatives and affiliates.
"SAHI NOMINEES" shall mean the four trustees nominated by, and
affiliated with, SAHI who serve on the APT Board of Trustees.
"SCG" shall mean Starwood Capital Group, L.P., a Delaware limited
partnership.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECTION 704(c) TAX ITEMS" shall have the meaning set forth in Section
6.1(c)(iii) hereof.
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"SHARE CLOSING PRICE" shall mean, with respect to a particular date,
the last reported sales price on such date or, in case no such reported
sale takes place on such date, the average of the reported closing bid and
asked prices on such date, in either case on the American Stock Exchange,
or if the Shares are not then listed or admitted to trading on such
exchange, on the principal national securities exchange on which the Shares
are then listed or admitted to trading or, if not then listed or admitted
to trading on any national securities exchange, the closing sale price on
such date of the Shares or, in case no reported sale takes place on such
date then, the average of the closing bid and asked prices on such date,
on NASDAQ or any comparable system. If the Shares are not then quoted on
NASDAQ or any comparable system, the Board of Trustees of the Trust shall
in good faith determine the Share Closing Price.
"SHARES" shall mean the Class A common shares of beneficial interest,
par value $1.00 per share, of the General Partner.
"STARWOOD MEZZANINE" shall mean Starwood Mezzanine Investors, L.P.,
a Delaware limited partnership.
"STARWOOD PARTNERSHIP AGREEMENT" shall mean the Amended and Restated
Limited Partnership Agreement of Starwood Mezzanine, dated as of November
1, 1994, including all waivers, consents or amendments thereto.
"TAX ITEMS" shall have the meaning set forth in Section 6.1(c)(i)
hereof.
"TAX PAYMENT LOAN" shall have the meaning set forth in Section 6.7(a)
hereof.
"TAX PAYMENT LOAN DATE" shall have the meaning set forth in Section
6.7(a) hereof.
"UBTI" shall mean "unrelated business taxable income" as defined in
Section 512 of the Code.
"UNITS" shall have the meaning set forth in Section 4.1(c) hereof.
"WITHHOLDING TAX ACT" shall have the meaning set forth in Section
6.7(a) hereof.
ARTICLE 2
FORMATION AND BUSINESS OF THE PARTNERSHIP
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2.1 FORMATION. The parties hereto do hereby form a limited partnership
effective upon the filing of the Certificate with the Secretary of State of
Delaware and pursuant to the provisions of the Act and upon the terms and
conditions set forth herein. The parties hereto agree that the rights and
liabilities of the Partners shall be as provided herein. The parties hereto
shall immediately execute and deliver all certificates and other documents and
do all
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filings, recordings and publishing and other acts as in the judgment of the
General Partner may be appropriate to comply with all of the requirements for
the formation and continuation of the Partnership as a limited partnership under
the Act and the qualification of the Partnership in any jurisdiction in which
the Partnership owns property or conducts business.
2.2 NAME. The name of the Partnership shall be APMT Limited Partnership,
or such other name as shall be chosen from time to time by the General Partner
in its sole and absolute discretion; provided, however, that the General Partner
may not choose the name (or any derivative thereof) of any Limited Partner
without the prior written consent of such Limited Partner.
2.3 CHARACTER OF THE BUSINESS. The purpose of the Partnership shall be
to acquire, hold, own, develop, redevelop, construct, improve, maintain,
operate, manage, sell, lease, rent, transfer, encumber, mortgage, convey,
exchange and otherwise dispose of or deal with the Diversified Portfolio,
subject to Section 7.1 and any other real and personal property of all kinds,
to undertake such other activities as may be necessary, desirable or appropriate
to the business of the Partnership, to engage in such other activities as shall
be necessary, desirable or appropriate to effectuate the foregoing purposes; and
to otherwise engage in any enterprise or business in which a limited partnership
may engage or conduct under the Act. The Partnership shall have all powers
necessary, desirable or appropriate to accomplish the purposes enumerated. In
connection with the foregoing, but subject to the terms and conditions of this
Agreement, the Partnership shall have full power and authority to enter into,
perform and carry out contracts of any kind, to borrow money and to issue
evidences of indebtedness, whether or not secured by Liens, and, directly or
indirectly, to acquire and construct additional Properties necessary or useful
in connection with its business.
2.4 LOCATION OF PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Partnership shall be at 340 N. Westlake
Boulevard, Suite 230, Westlake, California 91362 or such other location as shall
be selected from time to time by the General Partner in its sole and absolute
discretion; provided, however, that the General Partner shall notify the Limited
Partners of any change in the location of the principal place of business of the
Partnership within thirty (30) days thereafter.
2.5 REGISTERED AGENT AND REGISTERED OFFICE. The registered agent of the
Partnership shall be The Corporation Trust Company or such other Person as the
General Partner may select in its sole and absolute discretion. The registered
office of the Partnership in the State of Delaware shall be c/o The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 or such other
location as the General Partner may from time to time select in its sole
discretion; provided, however, that the General Partner shall notify the Limited
Partners of any change in the registered office or registered agent of the
Partnership within thirty (30) days thereafter.
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ARTICLE 3
TERM
3.1 COMMENCEMENT. The Partnership's term commenced upon the filing
of the Certificate with the Secretary of State of Delaware.
3.2 DISSOLUTION. The Partnership shall continue until dissolved and
terminated upon the occurrence of the earliest of the following events:
(a) the dissolution, termination, withdrawal, retirement, expulsion
or Bankruptcy of a General Partner, unless the Partnership's business is
continued as provided in Section 9.1 hereof;
(b) the election to dissolve the Partnership made in writing by the
General Partner and a Majority-In-Interest of the Limited Partners;
(c) the sale or other disposition of all or substantially all of the
assets of the Partnership unless the General Partner elects to continue the
Partnership business;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act, which decree is final and not
subject to appeal; or
(e) December 31, 2096.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS: UNITS.
(a) As of the date first above written, the Partners have the
Percentage Interests in the Partnership as set forth in Exhibit B, which
Percentage Interests shall be adjusted to the extent necessary to reflect
property exchanges, redemptions or conversions of Partnership Interests,
Capital Contributions, the issuance of additional Partnership Interests or
any other event having an effect on a Partner's Percentage Interest, in
each case to the extent permitted by and in accordance with this Agreement.
Except to the extent specifically set forth in this Agreement with respect
to the General Partner, the Partners shall have no obligation to make any
additional Capital Contributions or loans to the Partnership, even if the
failure to do so could result in the Bankruptcy or insolvency of the
Partnership or any other adverse consequence to the Partnership.
(b) The General Partner shall, from time to time, contribute cash
or Property to the Partnership such that the General Partner's Percentage
Interest shall at all times
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be at least one percent (1%) and the General Partner's Capital Account
balance shall be at least one percent (1%) of the total positive Capital
Account balances for the Partnership.
(c) The interest of a Partner (or an assignee of a Partner) in
capital, allocations of Net Income, Net Losses and distributions shall be
evidenced by the issuance to such Partner (or assignee) of one or more
"Units". The aggregate total of all Units outstanding and the ownership of
Units by each Partner, as of the date of this Agreement, are as set forth
on Exhibit B hereto.
(d) From time to time, the General Partner may cause the Partnership
to issue additional Partnership Interests to existing or newly-admitted
Partners in exchange for additional Capital Contributions (excluding
Capital Contributions pursuant to Section 4.1(b)), provided that (i) the
Gross Asset Value represented by the existing Partner's Units shall not
thereby be decreased and (ii) any dilution of Partnership Interests shall
be borne by the General Partner and Limited Partners in proportion to their
Percentage Interests prior to such additional contributions. If the
General Partner contributes to the Partnership the net proceeds to the
General Partner from any offering or sale of Shares (including, without
limitation, any issuance of Shares pursuant to the exercise of options,
warrants, convertible securities, or similar rights to acquire Shares),
the Partnership shall issue to the General Partner an amount of Units equal
in number to the number of Shares issued in such offering.
(e) In the event Starwood Mezzanine exercises the Class A Warrant
for at least 2,000,000 Shares, the Board of Trustees of APT shall have
the right to cause APT to contribute up to substantially all of APT's
theretofore uncontributed assets to the Partnership for additional
Partnership Interests (the "Asset Contribution") and, following any such
contribution, to cause APT to agree to conduct all of its real estate
related investment activities exclusively through the Partnership on such
terms and conditions as the APT Board of Trustees agree to at such time.
(f) Subsequent to the date hereof, any contributions of cash or non-
cash assets by Starwood Mezzanine or other Partners (i) shall require the
approval of the General Partner, (ii) shall consist of assets which enable
APT to continue to meet the REIT Requirements and (iii) with respect to
contributions by Starwood Mezzanine and its Affiliates, shall be subject
to Section 7.1 hereof.
(g) No fractional Units shall remain outstanding. In lieu of issuing
a fractional Unit to a holder of Units, the number of Units to be held by
such holder shall be rounded to the nearest whole Unit.
(h) In the event of any change in the outstanding number of Shares by
reason of any share dividend, split, reverse split, recapitalization,
merger, consolidation or combination, the number of Units held by each
Partner (or assignee) shall be proportionately adjusted such that, to the
extent possible, one Unit remains the equivalent of one Share without
dilution; provided that APT has contributed substantially all of
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APT's theretofore uncontributed assets to the Partnership pursuant to
Section 4.1(e) hereof. It is the intent of the Partners that, to the
extent possible the number of Units held by the General Partner shall at
all times equal the number of issued and outstanding Shares; provided that
APT has contributed substantially all of APT's theretofore uncontributed
assets to the Partnership pursuant to Section 4.1(e) hereof.
(i) The General Partner without notice may require at any time, or
retroactively, withdrawal of all or any portion of the Capital Account of
any Limited Partner (i) that the General Partner determines is a benefit
plan investor (within the meaning of Department of Labor Regulations (S)
2510.3-101(f)(2)) in order for the assets of the Partnership not to be
treated as plan assets under ERISA, (ii) which made a material
misrepresentation to the General Partner in connection with its purchase
of Units, or (iii) if such Limited Partner's ownership of Units would
result in the violation of any law or regulation applicable to the
Partnership or a Partner. The Limited Partner thus designated shall
withdraw from the Partnership or withdraw that portion of its Partner
Capital Account specified in such notice, as the case may be, as of the
close of business on such date as determined by the General Partner. In
addition to any payment to the Limited Partner for its Capital Account,
if the General Partner requires withdrawal of the Limited Partner pursuant
to clause (i) above then the Limited Partner shall be entitled to an
additional payment equal to the amount, if any, that the Average Share
Closing Price for the Shares representing the Units which may be exchanged
for such Shares which would be redeemed upon withdrawal of all or any
portion of the withdrawn Capital Account on the date of withdrawal exceeds
all or such portion of the withdrawn Capital Account.
4.2 PURCHASE RIGHTS. If the General Partner grants, issues or sells any
options, convertible securities or rights to purchase shares, warrants, or other
property pro rata to the record holders of Shares (collectively, "Purchase
Rights"), the Partners shall, to the extent practicable and consistent with the
other provisions of this Agreement, be entitled to acquire from the Partnership
interests in the Partnership that are substantially similar in amount, tone and
tenor to the Purchase Rights to which such Partners would be entitled if such
Partners had converted their Units into Shares immediately prior to the grant,
issue or sale of the Purchase Rights; provided that APT has contributed
substantially all of APT's theretofore uncontributed assets to the Partnership
pursuant to Section 4.1(e) hereof.
4.3 REDEMPTION. If the General Partner shall redeem any of its
outstanding Shares (including the issuance of cash in lieu of fractional
Shares), the Partnership shall concurrently therewith redeem an equal number
of Units held by the General Partner for the same price as paid by the General
Partner for the redemption of such Shares; provided that APT has contributed
substantially all of APT's theretofore uncontributed assets to the Partnership
pursuant to Section 4.1(e) hereof. Similar redemptions of interests of the
General Partner in the Partnership shall occur if any other outstanding
securities of the General Partner are redeemed or otherwise retired.
4.4 NO THIRD PARTY BENEFICIARIES. No creditor or other third party shall
have the right to enforce any right or obligation of any Partner to make Capital
Contributions or loans
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or to pursue any other right or remedy hereunder or at law or in equity, it
being understood and agreed that the provisions of this Agreement shall be
solely for the benefit of, and may be enforced solely by, the parties hereto
and their respective successors and assigns. None of the rights or obligations
of the Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of
any of the Partners.
ARTICLE 5
INDEMNIFICATION
5.1 INDEMNIFICATION OF GENERAL PARTNER.
(a) To the fullest extent permitted by law, the Partnership shall
and does hereby indemnify an Indemnitee against and from all liability,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) (the "Losses")
sustained or incurred by such Indemnitee as a result of or arising out of
any action, suit or proceeding (including mediation and arbitration
proceedings) arising out of or relating to the formation, business or
operations of the Partnership in which any Indemnitee may be involved, or
is threatened to be involved, as a party, witness or otherwise, by reason
of the fact that such Person was an Indemnitee, whether or not the same
shall proceed to judgment or be settled or otherwise be brought to a
conclusion; provided that such indemnification is not available to the
Indemnitee if the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and was committed with fraud, gross
negligence or willful misconduct. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 5.1(a). Any indemnification pursuant to this Section 5.1 shall be
made only out of the assets of the Partnership and no Partner shall have
any personal liability therefor. The provisions of this Section 5.1 are
for the benefit of the Indemnitees, their heirs, successors, assigns,
personal representatives and administrators, and shall not be deemed to
created any rights for the benefit of any other Person. The foregoing
notwithstanding, the General Partner shall not be entitled to
indemnification from the Partnership with respect to matters provided for
in Section 7.2 of the Formation Agreement.
(b) Reasonable expenses incurred by an Indemnitee who is a party or
witness in a proceeding shall be paid or reimbursed by the Partnership in
advance of the final disposition of the proceeding upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership, as authorized in this Section 5.1, has
been met, and (ii) a written undertaking by or on behalf of the Indemnitee
to repay the
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amount paid or reimbursed if it shall ultimately be determined that such
Indemnitee is not entitled to be indemnified hereunder.
(c) The indemnification provided by this Section 5.1 shall be in
addition to any other rights to which an Indemnitee may be entitled under
any agreement, as a matter of law, or otherwise, and shall continue as to
an Indemnitee who has ceased to serve in such capacity. The Partnership
shall purchase and maintain insurance, on behalf of the Indemnitees,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify
such Person against such liability under the provisions of this Agreement.
An Indemnitee shall not be denied indemnification in whole or in part under
this Section 5.1 solely because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies.
(d) For purposes of this Section 5.1, excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable
law shall constitute fines within the meaning of this Section 5.1 and
actions taken or omitted by the Indemnitee with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose which is not opposed to the
best interests of the Partnership.
5.2 INDEMNIFICATION OF LIMITED PARTNERS. From and after the date hereof,
the Partnership shall indemnify and hold harmless each Limited Partner, its
Affiliates, employees, officers, directors and agents against and from all
liability, demands, claims, actions or causes of action, assessments, losses,
fines, penalties, costs, damages and expenses (including, without limitation,
reasonable attorneys and accountants fees and expenses) sustained or incurred
by such Limited Partner or Affiliate or any assignee or successor thereof
(including, without limitation, any permitted assignee of a Limited Partner
under Article 9 hereof) as a result of or arising out of any action, suit or
proceeding (including mediation and arbitration proceedings) (a) arising out
of or relating to the operation of the Partnership's business or the Limited
Partner being a Partner in the Partnership (excluding, specifically, actions,
suits or proceedings arising out of actual or alleged material breaches of a
Partner's representations, warranties or covenants hereunder or pursuant to the
Formation Agreement or other breaches set forth in Section 7.1 of the Formation
Agreement or arising out of acts by a Limited Partner other than in its capacity
as such) and (b) naming a Limited Partner or any of its Affiliates as a party to
such proceeding. Any indemnification pursuant to this Section 5.2 shall be made
only out of the assets of the Partnership and no Partner shall have any personal
liability therefor. The provisions of this Section 5.2 are for the benefit of
the Limited Partners, their Affiliates (excluding the General Partner),
employees, officers, directors and agents, and shall not be deemed to create any
rights for the benefit of any other Persons.
5.3 NOTICE OF CLAIMS. If any Person believes that it is entitled to
indemnification under this Article 5, such Person shall so notify the
Partnership promptly in writing describing such claim for indemnification, the
amount thereof, if known, and the method of computation, all with reasonable
particularity and containing a reference to the provisions of this Agreement
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in respect of which such claim shall have occurred; provided, however, that the
omission by such indemnified party to give notice as provided herein shall not
relieve the Partnership of its indemnification obligation under this Article 5
except to the extent that the Partnership is materially damaged as a result of
such failure to give notice. If any action at law or suit in equity is
instituted by or against a third party with respect to which any of the Persons
entitled to indemnification under this Article 5 intends to make a claim for
indemnification under this Article 5, any such Person shall promptly notify the
Partnership of such action or suit; provided, however, that the omission by such
indemnified party to give notice as provided herein shall not relieve the
Partnership of its indemnification obligation under this Article 5 except to the
extent that the Partnership is materially damaged as a result of such failure to
give notice. Any Person entitled to indemnification hereunder shall use
reasonable efforts to minimize the amount of any claim for indemnification
hereunder.
5.4 THIRD PARTY CLAIMS. In the event of any claim for indemnification
hereunder resulting from or in connection with any claim or legal proceeding
by a third party, the indemnified Person shall give such notice thereof to the
Partnership not later than twenty (20) business days prior to the time any
response to the asserted claim is required, if possible, and in any event within
fifteen (15) days following the date such indemnified Person has actual
knowledge thereof; provided, however, that the omission by such indemnified
Person to give notice as provided herein shall not relieve the Partnership of
its indemnification obligation under this Article 5 except to the extent that
the Partnership is materially damaged as a result of such failure to give
notice. In the event of any such claim for indemnification resulting from or
in connection with a claim or legal proceeding by a third party, the Partnership
may, at its sole cost and expense, assume the defense thereof; provided,
however, that counsel for the Partnership, who shall conduct the defense of such
claim or legal proceeding, shall be reasonably satisfactory to the indemnified
Person; and provided, further, that if the defendants in any such actions
include both the indemnified Persons and the Partnership and the indemnified
Persons shall have reasonably concluded based on a written opinion of counsel
that there may be legal defenses or rights available to them which have not been
waived and are in actual or potential conflict with those available to the
Partnership, the indemnified Persons shall have the right to select one law firm
reasonably acceptable to the Partnership to act as separate counsel, on behalf
of such indemnified Persons, at the expense of the Partnership. Unless the
indemnified Persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, if the Partnership assumes the
defense of any such claim or legal proceeding, it shall not consent to entry
of any judgment, or enter into any settlement, that (a) is not subject to
indemnification in accordance with the provisions in this Article 5, (b)
provides for injunctive or other non-monetary relief affecting the indemnified
Persons or (c) does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such indemnified Persons of a release from all
liability with respect to such claim or legal proceeding, without the prior
written consent of the indemnified Persons (which consent, in the case of
clauses (b) and (c), shall not be unreasonably withheld or delayed); and
provided, further, that, unless the indemnified Persons are represented by
separate counsel pursuant to the second proviso of the immediately preceding
sentence, the indemnified Person may, at their own expense, participate in any
such proceeding with the counsel of their choice without any right of control
thereof. So long as the Partnership is in good faith defending such claim or
proceeding, the indemnified Persons shall not compromise or settle such claim
or proceeding without the prior written
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consent of the Partnership, which consent shall not be unreasonably withheld or
delayed. If the Partnership does not assume the defense of any such claim or
litigation in accordance with the terms hereof, the indemnified Persons may
defend against such claim or litigation in such manner as they may deem
appropriate, including, without limitation, settling such claim or litigation
(after giving prior written notice of the same to the Partnership and obtaining
the prior written consent of the Partnership, which consent shall not be
unreasonably withheld or delayed) on such terms as the indemnified Persons may
deem appropriate, and the Partnership will promptly indemnify the indemnified
Persons in accordance with the provisions of this Article 5.
ARTICLE 6
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND
ACCOUNTING MATTERS
6.1 ALLOCATIONS. The Net Income, Net Loss and other Partnership items
shall be allocated pursuant to the provisions of this Section 6.1 hereto.
(A) ALLOCATION OF NET INCOME AND NET LOSS.
(i) Net Income. Except as otherwise provided herein, Net Income
for any fiscal year or other applicable period shall be allocated in
the following order and priority:
(A) First, to the General Partner, until the cumulative Net
Income allocated pursuant to this clause (i)(A) for the
current and all prior periods equals the cumulative Net
Loss allocated pursuant to the second sentence of
clause (ii) hereof for all prior periods; and
(B) Thereafter, the balance of the Net Income, if any,
shall be allocated to the holders of Units in
accordance with their respective holdings of Units.
(ii) Net Loss. Except as otherwise provided herein, Net Loss of
the Partnership for each fiscal year or other applicable period shall
be allocated to the holders of Units in accordance with their
respective holdings of Units. The preceding sentence notwithstanding,
to the extent any Net Loss allocated to a holder would cause such a
holder to have an Adjusted Capital Account Deficit as of the end of
the fiscal year to which such Net Loss relates, such Net Loss shall
not be allocated to such holder and instead shall be allocated to the
General Partner.
(B) SPECIAL ALLOCATIONS. Notwithstanding any provisions of Section
6.1(a) hereof, the following special allocations shall be made in the
following order:
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(i) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 6, if there is a net decrease in Partnership
Minimum Gain for any Partnership fiscal year (except as a result of
conversion or refinancing of Partnership indebtedness, certain capital
contributions or revaluation of the Partnership property as further
outlined in Section 1.704-2(f) of the Regulations), each holder of
Units shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount
equal to that holder's share of the net decrease in Partnership
Minimum Gain as determined under Section 1.704-2(g) of the
Regulations. The items to be so allocated shall be determined in
accordance with Section 1.704-2(f) of the Regulations. This clause
(i) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this clause (i) shall
be made in proportion to the respective amounts required to be
allocated to each holder of Units pursuant hereto.
(ii) Minimum Gain Chargeback Attributable to Partner
Nonrecourse Debt. Notwithstanding any other provision of this Article
6, if there is a net decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt during any fiscal year (other than due to the
conversion, refinancing or other change in the debt instrument causing
it to become partially or wholly nonrecourse, certain capital
contributions, or certain revaluations of Partnership property (as
further outlined in Section 1.704-2(i)(4) of the Regulations), each
holder of Units shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
an amount equal to the holder's share of the net decrease in the
Minimum Gain Attributable to Partner Nonrecourse Debt as determined
under Section 1.704-2(i) of the Regulations. The items to be so
allocated shall be determined in accordance with Sections 1.704-
2(i)(4) and (j)(2) of the Regulations. This clause (ii) is intended to
comply with the minimum gain chargeback requirement with respect to
Partner Nonrecourse Debt contained in said section of the Regulations
and shall be interpreted consistently therewith. Allocations pursuant
to this clause (ii) shall be made in proportion to the respective
amounts required to be allocated to each holder of Units.
(iii) Qualified Income Offset. In the event a holder of Units
unexpectedly receives any adjustments, allocations or distributions
described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the
Regulations and such holder has an Adjusted Capital Account Deficit,
items of Partnership income and gain shall be specially allocated to
such holder in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible, provided that
an allocation pursuant to this Section 6.1(b)(iii) shall be made only
if and to the extent that such holder would have an Adjusted Capital
Account Deficit after all other allocations provided for in this
Article VI have been tentatively made as if this Section 6.1(b)(iii)
were not in the Agreement. This clause (iii) is intended to
constitute a "qualified income offset" under Section 1.704-
1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
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(iv) Gross Income Allocation. In the event any holder of Units
has a deficit Capital Account at the end of any fiscal year which is
in excess of the sum of (x) the amount such holder is obligated to
restore pursuant to any provision of this Agreement and (y) the amount
such holder is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Regulations, each such holder shall be specially allocated items
of Partnership income and gain in the amount of such excess as quickly
as possible, provided that an allocation pursuant to this Section
6.1(b)(iv) shall be made only if and to the extent that such holder
would have a Capital Account deficit in excess of such sum after all
other allocations provided for in this Article 6 have been made as if
Section 6.1(b)(iii) hereof and this Section 6.1(b)(iv) were not in the
Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other applicable period shall be allocated to the
holders of Units in accordance with their respective holdings of
Units. For purposes of Section 1.752-3(a)(3) of the Regulations,
"excess nonrecourse liabilities" shall be allocated among the holders
of Units in proportion to their respective holdings of Units.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be
specially allocated to the holder of Units that bears the economic
risk of loss with respect to the Partner Nonrecourse Debt in respect
of which such Partner Nonrecourse Deductions are attributable (as
determined under Sections 1.704-2(b)(4) and (i)(1) of the
Regulations).
(vii) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or Section 743(b) of the Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the
Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to holders of Units in accordance with
their interests in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such sections
of the Regulations.
(viii) Curative Allocations. The Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss,
and deduction among the holders of Units so that, to the extent
possible, the cumulative net amount of allocations of Partnership
items under Sections 6.1(a) and (b) hereof shall be equal to the net
amount that would have been allocated to each holder of Units if the
Regulatory Allocations had not occurred. This subparagraph (viii) is
intended to minimize to the extent possible and to the extent
necessary any economic distortions which may result from application
of the Regulatory
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Allocations and shall be interpreted in a manner consistent therewith.
For purposes hereof, "Regulatory Allocations" shall mean the
allocations provided under this Section 6.1(b) (other than this
subparagraph) and allocations pursuant to the last sentence of Section
6.1(a)(ii) hereof.
(ix) Varying Interests. In the event the number of Units
outstanding during a fiscal year changes, the allocations pursuant to
this Article 6 shall be made by the General Partner to take such
varying interests into account in any reasonable manner permitted
under the Code and the Regulations.
(c) Tax Allocations.
(i) Generally. Subject to clauses (ii) and (iii) hereof, items
of income, gain, loss, deduction and credit to be allocated for income
tax purposes (collectively, "Tax Items") shall be allocated among the
holders of Units on the same basis as the Partnership's books of
account maintained pursuant to Section 6.3 hereof.
(ii) Recapture. If any portion of gain from the sale of
property is treated as gain which is ordinary income by virtue of the
application of Sections 467, 751, 1245 or 1250 of the Code ("Affected
Gain"), then (A) such Affected Gain shall be allocated among the
holders of Units in the same proportion that the depreciation and
amortization deductions giving rise to the Affected Gain were
allocated to such holders or to their predecessors in interest and (B)
other Tax Items of gain of the same character that would have been
recognized, but for the application of Sections 467, 751, 1245 and/or
1250 of the Code, shall be allocated away from those holders of Units
who are allocated Affected Gain pursuant to clause (A) so that, to the
extent possible, the other holders of Units are allocated the same
amount, and type, of capital gain that would have been allocated to
them had Sections 467, 751, 1245 and/or 1250 of the Code not applied.
For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be
deemed allocated on the same basis as Net Income or Net Loss for such
respective period.
(iii) Allocations Respecting Section 704(c) of the Code and
Revaluations. Property contributed to the Partnership shall be subject
to Section 7.04(c) of the Code and the Regulations thereunder so that,
notwithstanding paragraph (b) hereof, taxable gain from disposition,
taxable loss from disposition and tax depreciation with respect to
Partnership property that is subject to Section 704(c) of the Code
and/or Section 1.704-1(b)(2)(iv)(f) of the Regulations (collectively,
"Section 704(c) tax Items") shall be allocated on a property by
property basis in accordance with said Code Section and/or the
Regulations thereunder, as the case may be. The allocation of Section
704(c) Tax Items shall be made pursuant to the "traditional method" of
Section 1.704-3(b) of the Regulations. The General Partner will not
specially allocate Tax Items (other
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than the Section 704(c) Tax Items) to cure for the effect of the
ceiling rule. Allocations pursuant to this Section 6.1(c)(iii) are
solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, the Capital
Account or share of Net Income, Net Loss, other items or distributions
of any holder of Units pursuant to any provision of this Agreement.
(iv) Tax Credits and Other Items. Tax credits and other items
shall be allocated in accordance with the holdings of Units to the
extent permitted under Section 1.704-1(b)(4)(ii) of the Regulations or
other applicable provision of the Code and Regulations and otherwise
in accordance with such provisions.
6.2 DISTRIBUTIONS. The General Partner shall cause the Partnership to
distribute all, or such portion as the General Partner may in its reasonable
discretion determine after setting aside reasonable reserves for Partnership
purposes, of Net Cash Flow to the holders of Units who are holders on the
Partnership Record Date with respect to such distribution. Net Cash Flow shall
be distributed monthly. All such distributions shall be made pro rata in
accordance with the holders' ownership of Units. Notwithstanding the foregoing,
the General Partner is authorized to cause the Partnership to distribute
sufficient amounts, pro rata by ownership of Units, to enable the General
Partner to pay shareholder dividends that will satisfy the REIT Requirements
arising with respect to the General Partner's share of Net Income.
6.3 BOOKS OF ACCOUNT. At all times during the continuance of the
Partnership, the General Partner shall maintain or cause to be maintained full,
true, complete and correct books of account in accordance with GAAP, using the
calendar year as the fiscal and taxable year of the Partnership. In addition,
the Partnership shall keep all records required to be kept pursuant to the Act.
6.4 REPORTS. The General Partner shall cause to be sent to the Limited
Partners promptly after receipt of the same from the Accountants and in no event
later than sixty (60) days after the close of each fiscal year of the
Partnership, copies of Audited Financial Statements for the Partnership, or of
the General Partner if such statements are prepared solely on a consolidated
basis with the General Partner, for the immediately preceding fiscal year of the
Partnership. The Partnership shall also cause to be prepared such reports and/or
information as are necessary for the General Partner to determine its
qualification as a REIT and its compliance with REIT Requirements.
6.5 TAX ELECTIONS AND RETURNS. All elections required or permitted to be
made by the Partnership under any applicable tax law shall be made by the
General Partner in its sole and absolute discretion, except that the General
Partner shall, if requested by a Limited Partner or desired by the General
Partner, file an election on behalf of the Partnership pursuant to Section 754
of the Code to adjust the basis of the Partnership property in the case of a
transfer of a Partnership Interest or distribution from the Partnership,
including transfers made in connection with the exercise of the Rights, made in
accordance with the provisions of the Agreement. The General Partner shall cause
the Accountants to prepare and submit to the Limited Partner Representative on
or before February 15th of each year for review drafts of all federal and state
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income tax returns of the Partnership. If the Limited Partner Representative
determines that any modifications to the tax returns of the Partnership should
be considered, the Limited Partner Representative shall, within fifteen (15)
days following receipt of such tax returns from the Accountants or the General
Partner, indicate to the Accountants or to the General Partner the suggested
revisions to the tax returns, which returns shall be resubmitted to the Limited
Partner Representative for its review (but not approval). The Limited Partner
Representative shall complete their review of the resubmitted returns within ten
(10) days after receipt thereof from the Accountants or the General Partner. The
General Partner shall consult in good faith with the Limited Partner
Representative regarding any proposed modifications to the tax returns of the
Partnership. The General Partner shall be responsible for preparing and filing
all federal and state tax returns for the Partnership and furnishing copies
thereof to the Partners, together with required Partnership schedules showing
allocations of tax items, within the period of time prescribed by law. The
General Partner shall use reasonable efforts to make available to the holders of
Units final K-1's not later than March 1st of each year.
6.6 TAX MATTERS PARTNER. The General Partner is hereby designated as the
Tax Matters Partner within the meaning of Section 6231(a)(7) of the Code (and
any corresponding provisions of state and local law) for the Partnership;
provided, however, that (a) in exercising its authority as Tax Matters Partner,
the General Partner shall be limited by the provisions of this Agreement
affecting tax aspects of the Partnership; (b) the General Partner shall consult
in good faith with the Limited Partner Representative regarding the filing of an
administrative adjustment request with respect to the Partnership before filing
such request, it being understood, however, that the provisions hereof shall not
be construed to limit the ability of any Partner, including the General Partner,
to file an administrative adjustment request on its own behalf pursuant to
Section 6227(a) of the Code; (c) the General Partner shall consult in good faith
with the Limited Partner Representative regarding the filing of a petition for
judicial review of an administrative adjustment request under Section 6228 of
the Code, or a petition for judicial review of a final partnership
administrative judgment under Section 6226 of the Code relating to the
Partnership before filing such petition; (d) the General Partner shall give
prompt notice to the Limited Partner Representative and any notice partners
under Section 6231 of the Code of the receipt of any written notice that the
Internal Revenue Service intends to examine or audit Partnership income tax
returns for any year, receipt of written notice of the beginning of an
administrative proceeding at the Partnership level relating to the Partnership
under Section 6223 of the Code, receipt of written notice of the final
Partnership administrative adjustment relating to the Partnership pursuant to
Section 6223 of the Code, receipt of any request relating to the Partnership
pursuant to Section 6223 of the Code, and receipt of any request from the
Internal Revenue Service for waiver of any applicable statute of limitations
with respect to the filing of any tax return by the Partnership; and (e) the
General Partner shall promptly notify the Limited Partner Representative if the
General Partner does not intend to file for judicial review with respect to the
Partnership. Similar provisions shall apply in the case of any audit or
examination by a state or local taxing authority.
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6.7 WITHHOLDING PAYMENTS REQUIRED BY LAW.
(a) Unless treated as a Tax Payment Loan (as hereinafter defined), any
amount paid by the Partnership for or with respect to any holder of Units
on account of any withholding tax or other tax payable with respect to the
income, profits or distributions of the Partnership pursuant to the Code,
the Regulations, or any state or local statute, regulation, notice, ruling
or ordinance requiring such payment (a "Withholding Tax Act") shall be
treated as a distribution to such holder for all purposes of this
Agreement, consistent with the character or source of the income, profits
or cash which gave rise to the payment or withholding obligation. To the
extent that the amount required to be remitted by the Partnership under the
Withholding Tax Act exceeds the amount then otherwise distributable to such
holder, unless and to the extent that funds shall have been provided by
such holder pursuant to the last sentence of this Section 6.7(a), the
excess shall constitute a loan from the Partnership to such holder (a "Tax
Payment Loan") which shall be payable to the Partnership upon its demand to
such holder and shall bear interest, from the date that the Partnership
makes the payment to the relevant taxing authority, at the rate announced
from time to time by Citibank, N.A. (or any successor thereto) as its
"prime rate" plus 300 basis points (3.0%), compounded monthly (but in no
event higher than the highest interest rate permitted by applicable law).
So long as any Tax Payment Loan to any holder of Units or the interest
thereon remains unpaid, the Partnership shall make future distributions due
to such holder under this Agreement by applying the amount of any such
distributions first to the payment of any unpaid interest on such Tax
Payment Loan and then to the repayment of the principal thereof, and no
such future distributions shall be paid to such holder until all of such
principal and interest has been paid in full. If the amount required to be
remitted by the Partnership under the Withholding Tax Act exceeds the
amount then otherwise distributable to a holder of Units, the Partnership
shall notify such holder at least five (5) business days in advance of the
date upon which the Partnership would be required to make a Tax Payment
Loan under this Section 6.7(a) (the "Tax Payment Loan Date") and provide
such holder the opportunity to pay to the Partnership, on or before the Tax
Payment Loan Date, all or a portion of such deficit.
(b) The General Partner shall have the authority to take all actions
necessary to enable the Partnership to comply with the provisions of any
Withholding Tax Act applicable to the Partnership and to carry out the
provisions of this Section 6.7. Nothing in this Section 6.7 shall create
any obligation on the General Partner to advance funds to the Partnership
or to borrow funds from third parties in order to make any payments on
account of any liability of the Partnership under a Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not paid by a holder of
Units within thirty (30) days after written demand therefor is made by the
General Partner, the General Partner may cause all distributions that would
otherwise be made to such holder to be retained by the Partnership, or sell
such holder's Units for sale proceeds, in each case up to the amount
necessary to repay such Tax Payment Loan, including all accrued and unpaid
interest thereon, and such retained distributions or sale proceeds shall be
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applied against, first, the accrued interest on and, second, the principal
of, such Tax Payment Loan.
ARTICLE 7
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1 POWERS AND DUTIES OF GENERAL PARTNER.
(a) The General Partner shall be responsible for the management of the
Partnership's business and affairs. Except as otherwise herein expressly
provided, the General Partner shall have, and is hereby granted, full and
complete power, authority and discretion to take such action for and on
behalf of the Partnership and in its name as the General Partner shall, in
its sole and absolute discretion, deem necessary or appropriate to carry
out the Partnership's business and the purposes for which the Partnership
was organized. Except as otherwise expressly provided herein, the General
Partner shall, on behalf of, and at the expense of, the Partnership have
the right, power and authority:
(1) to manage, control, invest, reinvest, acquire by purchase,
lease or otherwise, sell, contract to purchase or sell, grant, obtain,
or exercise options to purchase, options to sell or conversion rights,
assign, transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure, lease for any
term and otherwise deal with any and all property and debt instruments
of whatsoever kind and nature, and wheresoever situated, in
furtherance of the business or purposes of the Partnership;
(2) to acquire, directly or indirectly, interests in and with
respect to real estate of any kind and of any type (except as excluded
herein), and any and all kinds of interest therein (including, without
limitation, Entities investing therein) and to determine the manner in
which title thereto is to be held; to manage (directly or through
property managers, asset managers or servicers), insure against loss,
protect and subdivide any of the real estate, interests therein or
parts thereof; to improve, develop or redevelop any such real estate,
to participate in the ownership and development of any property; to
dedicate for public use, to vacate any subdivisions or parts thereof,
to resubdivide, to contract to sell, to grant options to purchase or
lease, to sell on any terms; to convey, mortgage, pledge or otherwise
encumber said property, or any part thereof; to lease said property or
any part thereof from time to time, upon any terms and for any period
of time, and to renew or extend leases, to amend, change or modify the
terms and provisions of any leases and to grant options to lease and
options to renew leases and options to purchase; to partition or to
exchange said real property, or any part thereof, for other real or
personal property; to grant easements or charges of any kind; to
release, convey, or assign any right, title or
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interest in or about or easement appurtenant to said property or any
part thereof; to construct and reconstruct, remodel, alter, repair,
add to or take from buildings on any property in which the Partnership
owns an interest; to insure any Person having an interest or
responsibility for the care, management or repair of such property; to
direct the trustee of any land trust to mortgage, lease, convey or
contract to convey the real estate held in such land trust or to
execute and deliver deeds, mortgages, notes and any and all documents
pertaining to the property subject to such land trust or in any matter
regarding such trust; and to execute assignments of all or any part of
the beneficial interest in such land trust; to accept prepayment of,
restructure, extend, foreclose upon, accept a deed in lieu of
foreclosure or otherwise deal with debt instruments;
(3) to employ, engage, indemnify or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary or
appropriate by the General Partner for the operation and management of
the Partnership business, including, but not limited to, contractors,
subcontractors, engineers, architects, surveyors, mechanics,
consultants, accountants, attorneys, insurance brokers, real estate
brokers and others;
(4) to enter into contracts on behalf of the Partnership, and to
cause all Administrative Expenses to be paid;
(5) to borrow or loan money, obtain or make loans and advances
from and to any Person for Partnership purposes, and to apply for and
secure from or accept and grant to any Person credit or
accommodations; to contract liabilities and obligations (including
interest rate swaps, caps and hedges) of every kind and nature with or
without security; and to repay, collect, discharge, settle, adjust,
compromise or liquidate any such loan, advance, obligation or
liability;
(6) to grant security interests, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give
as security or as additional or substitute security or for sale or
other disposition any and all Partnership property, tangible or
intangible, including, but not limited to, personal property and real
estate and interests in land trusts, and to make substitutions
thereof, and to receive any proceeds thereof upon the release or
surrender thereof; to sign, execute and deliver any and all
assignments, deeds, bills of sale and contracts and instruments in
writing, to authorize, give, make, procure, accept and receive moneys,
payments, property notices, demands, protests and authorize and
execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive agreements, undertakings and instruments
of every kind and nature; and generally to do any and all other acts
and things incidental to any of the foregoing or with reference to any
dealings or transactions which the General Partner may deem necessary,
proper or advisable to effect or accomplish any of the foregoing, or
to carry out the business and purposes of the Partnership;
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(7) to acquire and enter into any contract of insurance
(including, without limitation, general partner liability and
partnership reimbursement Insurance policies) which the General
Partner may deem necessary or appropriate;
(8) to conduct any and all banking transactions on behalf of the
Partnership, to adjust and settle checking, savings and other accounts
with such institutions as the General Partner shall deem appropriate,
to draw, sign, execute, accept, endorse, guarantee, deliver, receive
and pay any checks, drafts, bills of exchange, acceptances, notes,
obligations, undertakings and other instruments for or relating to the
payment of money in, into or from any account in the Partnership's
name; to make deposits into and withdrawals from the Partnership's
bank accounts and to negotiate or discount commercial paper,
acceptances, negotiable instruments, bills of exchange and dollar
drafts;
(9) to demand, sue for, receive and otherwise take steps to
collect or recover all debts, rents, proceeds, interest, dividends,
goods, chattels, income from property, damages and all other property,
to which the Partnership may be entitled or which are or may become
due the Partnership from any Person; to commence, prosecute or
enforce, or to defend, answer or oppose, contest and abandon all legal
proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise, or submit to arbitration any
accounts, debts, claims, disputes and matters which may arise between
the Partnership and any other Person and to grant an extension of time
for the payment or satisfaction thereof on any terms, with or without
security;
(10) to acquire interests in and contribute money or property to
any limited or general partnerships, joint ventures, subsidiaries or
other entities as the General Partner deems desirable;
(11) to maintain or cause to be maintained the Partnership's
books and records;
(12) to prepare and deliver, or cause to be prepared and
delivered, all financial and other reports with respect to the
operations of the Partnership, and the preparation and filing of all
tax returns and reports;
(13) to do all things which are necessary or advisable for the
protection and preservation of the Partnership's business and assets,
and to execute and deliver such further instruments and undertake such
further acts as may be necessary or desirable to carry out the intent
and purposes of this Agreement and as are not inconsistent with the
terms hereof; and
(14) in general, to exercise all of the general rights,
privileges and powers permitted to be had and exercised under the Act.
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To the extent the duties of the General Partner require expenditures of
funds to be paid to third parties, the General Partner shall not have any
obligations hereunder except to the extent that Partnership funds are
reasonably available to it for the performance of such duties, and nothing
herein contained shall be deemed to require the General Partner, in its
capacity as such, to expend its individual funds for payment to third
parties or to undertake any specific liability or litigation on behalf of
the Partnership.
(b) Notwithstanding any contrary term or provision of this Agreement,
including, but without limitation, the provisions of Section 7.1(a) hereof,
the Partnership shall not take any action which (or fail to take any
action, the omission of which) in the reasonable judgment of the General
Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to qualify or continue to qualify as a
REIT, (ii) could subject the General Partner to any additional taxes under
Section 857 or Section 4981 of the Code or other potentially adverse
consequences under the Code, (iii) could otherwise violate the REIT
Requirements or (iv) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner or
its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
(c) Notwithstanding any contrary term or provision of this Agreement,
including, but without limitation, the provisions of Section 7.1(a) hereof,
the Partnership shall not commingle its funds with those of any Affiliate
or other entity; funds and other assets of the Partnership shall be
separately identified and segregated; all of the Partnership's assets shall
at all times be held by or on behalf of the Partnership; and, if held on
behalf of the Partnership by another entity, shall at all times be kept
identifiable (in accordance with customary usages) as assets owned by the
Partnership; and the Partnership shall maintain its own separate bank
accounts, payroll and books of account.
(d) Without the consent of all the Limited Partners, the General
Partner shall have no power to do any act in contravention of this
Agreement or possess any Partnership property for other than a partnership
purpose.
(e) Notwithstanding any contrary term or provision of this Agreement,
including, but without limitation, the provisions of Section 7.1(a) hereof,
during any period in which Starwood Mezzanine shall have an interest in
either APT or the Partnership, without the approval of the limited partners
of Starwood Mezzanine pursuant to the Starwood Partnership Agreement (i)
neither APT nor the Partnership may enter into any service agreement with
the SAHI Group, or (ii) subject to Section 4.1(f), neither APT nor the
Partnership may acquire (by contribution or purchase) any additional debt
or equity securities from the SAHI Group.
(f) Notwithstanding any contrary term or provision of this Agreement,
including, but without limitation, the provisions of Section 7.1(a) hereof,
during any period in which the SAHI Nominees shall constitute a majority of
the APT Board of Trustees (or SAHI, the SAHI Nominees or their respective
affiliates collectively control a sufficient number of voting securities of
APT to elect a majority of trustees on the
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Board of Trustees) and Starwood Mezzanine shall have an interest in either
APT or the Partnership, (i) without the approval of the limited partners of
Starwood Mezzanine pursuant to the Starwood Partnership Agreement (A)
neither APT nor the Partnership shall pursue any equity interests as a
principal purpose, excluding equity interests which are incidental to, or
acquired pursuant to the exercise of remedial rights with respect to, a
debt instrument and (B) neither APT nor the Partnership shall invest in
real estate related debt interests issued by obligors that are not
operating companies or originate or purchase mortgage loans issued by
obligors that are not operating companies and (ii) neither APT nor the
Partnership shall incur indebtedness during any period in which the
incurrence of such indebtedness would increase the amount of UBTI to be
incurred by the limited partners of Starwood Mezzanine without the prior
written consent of Starwood Mezzanine.
(g) Notwithstanding any contrary term or provision of this Agreement,
including, but without limitation, the provisions of Section 7.1(a) hereof,
without the amendment, termination or waiver of provisions of certain non-
competition agreements between Starwood Capital Group, L.P. and Starwood
Lodging Trust, a publicly traded hotel REIT the shares of which are paired
and trade with those of Starwood Lodging Corporation (NYSE: "HOT"), APT
and the Partnership are prohibited from: (i) making investments in loans
collateralized by hotel assets where it is anticipated that the underlying
equity will be acquired by the debt holder within one (1) year from the
acquisition of such debt, (ii) acquiring equity interests in hotels (other
than acquisitions of warrants, equity participations or similar rights
incidental to a debt investment by APT or the Partnership or that are
acquired as a result of the exercise of remedies in respect of a loan in
which APT or the Partnership has an interest) or (iii) selling or
contributing to or acquiring any interests in HOT, including debt positions
or equity interests obtained by APT or the Partnership under, pursuant to
or by reason of the holding of debt positions.
7.2 [INTENTIONALLY LEFT BLANK]
7.3 REIMBURSEMENT OF THE GENERAL PARTNER.
(a) Except as provided in this Section 7.3 and elsewhere in this
Agreement (including the provisions of Articles 5, 6 and 8 hereof regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not receive payments from or be compensated for its
services as general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses it incurs relating to the operation
of, or directly for the benefit of, the Partnership and its assets,
including, without limitation, those Administrative Expenses described in
clauses (a) and (b) of the definition thereof. Such reimbursements shall
be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 5.1 hereof.
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(c) Notwithstanding the foregoing provisions of this Section 7.3 or
elsewhere in this Agreement, except for costs and expenses incurred by the
General Partner to administer the Partnership and its properties, without
the prior written consent of Starwood Mezzanine, the Partnership shall not
be responsible for reimbursing the General Partner for, and shall not
reimburse the General Partner for, any REIT Expenses or REIT Compliance
Expenses, including, without limitation, any of the General Partner's
overhead and expenses (including, without limitation, those incurred to
meet public company reporting requirements), (i) with respect to REIT
Expenses, for a period ending two (2) years from the date hereof or on such
earlier date on which (A) Starwood Mezzanine shall seek to register any
Shares received by it in exchange for its Units or (B) APT has contributed
substantially all of APT's theretofore uncontributed assets to the
Partnership in accordance with Section 4.1(e), (ii) with respect to REIT
Compliance Expenses, for a period ending two (2) years from the date hereof
or on such earlier date on which Starwood Mezzanine shall seek to register
any shares received by it in exchange for its Units. Thereafter, the
Partnership shall reimburse the General Partner for REIT Expenses and REIT
Compliance Expenses incurred after the end of said period.
7.4 CONTRACTS WITH AFFILIATES. The Partnership may engage in
transactions and enter into contracts with Affiliates, and lend money to or
borrow money from Affiliates which are on terms fair and reasonable to the
Partnership and no less favorable to the Partnership than would be obtained from
unaffiliated third parties.
7.5 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets, whether
real, personal or mixed, and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby acknowledges and confirms that any Partnership assets for which legal
title is held in the name of any nominee or Affiliate of the General Partner
shall be held for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
7.6 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner has full power and authority to encumber, sell
or otherwise use in any manner any and all assets of the Partnership and to
enter into any contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. In no event shall any Person
dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed
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on behalf of the Partnership by the General Partner shall be conclusive evidence
in favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
7.7 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary or other
damages to the Partnership, any of the Partners or any assignee of any
interest of any Partner for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General
Partner acted without fraud, gross negligence or willful misconduct.
(b) The Limited Partners expressly acknowledge (i) that the General
Partner is acting on behalf of the Partnership and the General Partner's
shareholders collectively, (ii) that, subject to the terms and conditions
of this Agreement, the General Partner may, but is under no obligation to,
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or any assignees
thereof except as provided in this Agreement) in deciding whether to cause
the Partnership to take (or decline to take) any actions; and (iii) that
the General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by Limited Partners
in connection with such decisions, provided that the General Partner acted
without fraud, gross negligence or willful misconduct.
(c) Subject to its obligations and duties as General Partner set forth
in Section 7.1 hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon
it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any fraud, willful misconduct or gross
negligence on the part of any such agent appointed by it without fraud,
gross negligence or willful misconduct.
(d) Any amendment, modification or repeal of this Section 7.7 or any
provision hereof shall be prospective only and shall not in any way affect
the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.7 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may be
asserted.
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7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report or other document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the advice or opinion of such Persons as to matters
which the General Partner reasonably believes to be within such Person's
professional or expert competence and in accordance with such advice or
opinion shall be prima facie evidence that such actions have been done or
omitted in good faith.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and any attorney or attorney-in-fact duly appointed by the General
Partner. Each such attorney shall, to the extent provided by the General
Partner in power of attorney, have full power and authority to do and
perform all and every act and duty which is permitted or required to be
done by the General Partner hereunder.
7.9 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS.
(a) The Partners acknowledge and agree that the General Partner has
the authority to cause the Partnership to be operated in a manner that will
enable the General Partner to (i) satisfy the REIT Requirements and (ii)
avoid the imposition of any federal income or excise tax liability on the
General Partner. The General Partner has the authority to cause the
Partnership to avoid taking any action which would result in the General
Partner ceasing to satisfy the REIT Requirements or would result in the
imposition of any federal income or excise tax liability on the General
Partner.
(b) Without the prior consent of the General Partner, no Limited
Partner or holder of Units or any Affiliate shall take any action,
including acquiring, directly or indirectly, an interest in any tenant of a
Property owned by or pledged to the Partnership, which would have, through
the actual or constructive ownership of any tenant of any Property, the
effect of causing the percentage of the gross income of the General Partner
that fails to be treated as "rents from real property" within the meaning
of Section 856(d)(2) of the Code to exceed such percentage on the date
hereof. Each Limited Partner and holder of Units shall use its best
efforts to notify the General Partner on a timely basis of any direct or
indirect acquisition or potential direct or indirect acquisition of Shares
by such Limited Partner or holder or any Affiliate or direct or indirect
owner of an interest in such Limited Partner or holder that could
reasonably be expected to have such effect.
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ARTICLE 8
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1 ACCOUNTING. In the event of the dissolution, liquidation and
winding-up of the Partnership, a proper accounting shall be made of the Capital
Account of each holder of Units and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution.
(a) In the event of the dissolution and liquidation of the Partnership
for any reason, the assets of the Partnership shall be liquidated for
distribution in the following rank and order:
(i) payment of creditors of the Partnership, including
creditors who are Partners or former Partners;
(ii) establishment of reserves as provided by the Liquidating
Trustee to provide for contingent liabilities, if any; and
(iii) to the holders of Units in accordance with Section 6.2.
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (ii) above are in excess of the
reasonable requirements of the Partnership, the amount determined to be
excess shall be distributed to the Partners in accordance with the
provisions of this Section 8.1(a). Partner or holder of Units shall be
liable to any other Partner or holder of Units for a deficit balance in its
Capital Account.
(b) Notwithstanding the provisions of Section 8.1(a) hereof which
require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidating Trustee determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would
cause undue loss to the Partners, the Liquidating Trustee may, in its sole
and absolute discretion, defer for a reasonable time liquidation of any
assets except those necessary to satisfy liabilities of the Partnership
(including to those Partners which are creditors of the Partnership)
and/or, with the consent of the Limited Partners, distribute to the
Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 8.1(a) hereof, undivided interests in such
Partnership assets as the Liquidating Trustee deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the
good faith judgment of the Liquidating Trustee, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidating Trustee deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidating Trustee shall determine the
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fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
8.2 DOCUMENTATION OF LIQUIDATION. Upon the completion of the dissolution
and liquidation of the Partnership, the Partnership shall terminate and the
Liquidating Trustee shall have the authority to execute and record any and all
documents or instruments required to effect the dissolution, liquidation and
termination of the Partnership.
ARTICLE 9
TRANSFER
9.1 GENERAL PARTNER. The General Partner shall not withdraw from the
Partnership and shall not sell, assign, pledge, encumber or otherwise dispose of
all or any portion of its Partnership Interest or Units without the Consent of
the Limited Partners, which consent may be given or withheld in each Limited
Partner's sole and absolute discretion. Upon any transfer of a Partnership
Interest in accordance with the provisions of this Section 9.1, the transferee
General Partner shall become vested with the powers and rights of the transferor
General Partner, and shall be liable for all obligations and responsible for all
duties of the General Partner, once such transferee has executed such
instruments as may be necessary to effectuate such admission and to confirm the
agreement of such transferee to be bound by all the terms and provisions of this
Agreement with respect to the Partnership interest so acquired. It shall be a
condition to any transfer otherwise permitted hereunder that the transferee
assumes by express agreement (or pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the General Partner are assumed by a
successor trust or corporation by operation of law) all of the obligations of
the transferor General Partner under this Agreement with respect to such
transferred Partnership Interest and no such transfer (other than pursuant to a
statutory merger or consolidation wherein all obligations and liabilities of the
transferor General Partner are assumed by a successor trust or corporation by
operation of law) shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners.
In connection with any such permitted transfer, the successor General Partner
shall be deemed admitted as such immediately prior to the effective time of the
transfer from the transferor General Partner and shall continue the business of
the Partnership without dissolution. If the General Partner withdraws or
retires from the Partnership, in violation of this Agreement or otherwise, or
dissolves, terminates or upon the bankruptcy of the General Partner, (a) the
remaining General Partners may elect to continue the Partnership business or (b)
within ninety (90) days thereafter, all of the remaining Partners (or, to the
extent permitted under the Act, such lesser number or percentage of the
Partners, but in no event less than a Majority-In-Interest of the Limited
Partners) may elect to continue the Partnership business by selecting a
substitute General Partner, which substitute General Partner accepts such
election and agrees to serve as General Partner. Such successor General Partner
shall thereupon succeed to the rights and obligations of the General Partner as
provided in this Section 9.1.
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9.2 TRANSFERS BY LIMITED PARTNERS.
(a) No Limited Partner shall have the right, directly or indirectly,
to transfer all or any part of his Partnership Interest or Units to any
Person without the prior written consent of the General Partner, which
consent may be given or withheld by the General Partner in its sole and
absolute discretion. The foregoing notwithstanding, the General Partner
hereby grants the consents described in this Section 9.2 to the following
categories of transfers, provided that any such transfer otherwise complies
with all of the other provisions of this Article 9 (including, but not
limited to, any additional consents required hereunder): (i) transfers of
Units; (ii) transfers of Partnership Interests (whether outright or in
trust) to members of a Partner's Immediate Family; (iii) transfers of
Partnership Interests to a Person holding a direct or indirect interest in
a Partner; (iv) transfers of Partnership Interests pursuant to an exercise
of Rights or (v) pledges to secure bona fide indebtedness.
(b) It shall be a condition to any transfer (other than a pledge,
encumbrance, hypothecation or mortgage) otherwise permitted hereunder that
the transferee assume by operation of law or express agreement all of the
obligations of the transferor under this Agreement (including, without
limitation, under Article 9 hereof) with respect to such transferred
Partnership Interest or Units and no such transfer (other than pursuant to
a statutory merger or consolidation wherein all obligations and liabilities
of the transferor are assumed by a successor corporation by operation of
law) shall relieve the transferor of its obligations under this Agreement
without the approval of the General Partner, in its reasonable discretion
(it being understood that a transferor shall be deemed relieved from such
obligations, without the necessity of any such approval, in respect of
Partnership Interests transferred pursuant to the Exchange Rights
Agreement). Upon such transfer, the transferee of a Partnership Interest
shall be admitted as a Limited Partner and shall succeed to all of the
rights of the transferor Limited Partner under this Agreement in the place
and stead of such transferor Limited Partner (which succession, in the
event of a pledge, may be entered into and become effective at the time of
foreclosure or other realization of such pledge). The foregoing
notwithstanding, a transferee of a Unit shall not be admitted as a
substituted Limited Partner unless the General Partner consents, which
consent may be given or withheld by the General Partner in its sole and
absolute discretion. Any transferee, whether or not admitted as a
substituted Limited Partner, shall succeed to the obligations of the
transferor hereunder (unless such transfer is a pledge, encumbrance,
hypothecation or mortgage or except as otherwise provided herein).
(c) In addition to any other restrictions on transfer provided herein,
no Partnership Interest or Units shall be transferable unless the
transferor gives written notice of the proposed transfer which notice shall
state, to the best of its knowledge, that such transfer will not violate
any of the restrictions set forth in Section 9.3 hereof.
(d) Any permitted transferee under Section 9.2 who is not admitted as
a Limited Partner in accordance with this Article 9 or a transferee who
only holds Units shall be considered an assignee for purposes of this
Agreement. An assignee shall be
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deemed to have had assigned to it, and shall be entitled to receive,
distributions from the Partnership and the share of Net Income, Net Losses
and any other items of income, gain, loss, deduction and credit of the
Partnership and rights attributable to the Partnership Interests assigned
to such transferee, but shall not be deemed to be a holder of Partnership
Interests for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Interests, directly or through its
transferor, in any matter presented to the Limited Partners for a vote. In
the event any such transferee desires to make a further assignment of any
such Partnership Interests, such transferee shall be subject to all the
provisions of this Article 9 to the same extent and in the same manner as
any Limited Partner desiring to make an assignment of Partnership
Interests.
(e) The Limited Partners acknowledge that neither the Partnership
Interests nor the Units have been registered under any federal or state
securities laws and, as a result thereof, they may not be sold or otherwise
transferred, except in compliance with such laws. Notwithstanding anything
to the contrary contained in this Agreement, no Partnership Interest or
Units may be sold or otherwise transferred unless such transfer is exempt
from registration under any applicable securities laws (as set forth in an
opinion of counsel provided to the Partnership if required by the General
Partner) or such transfer is registered under such laws, it being
acknowledged that the Partnership has no obligation to take any action
which would cause any such Partnership Interests or Units to be registered.
9.3 CERTAIN RESTRICTIONS ON TRANSFER. In addition to any other
restrictions on transfer herein contained, except with the consent of the
General Partner, in no event may any transfer of a Partnership Interest or Units
by any Person be made (a) to any person or Entity that lacks the legal right,
power or capacity to own a Partnership Interest or Units; (b) in the event such
transfer would cause the General Partner to cease to comply with the REIT
Requirements; (c) if such transfer would cause a termination of the Partnership
for federal income tax purposes; (d) if such transfer would, in the opinion of
counsel to the Partnership, cause the Partnership to cease to be classified as a
Partnership for federal income tax purposes; (e) if such transfer would result
in the Partnership being treated as a "publicly traded partnership" or is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code; (f) if the General Partner reasonably believes that such transfer may
(A) cause any portion or all of the assets of the Partnership to be deemed
pursuant to United States Department of Labor Regulation Section 2510.3-101 or
otherwise pursuant to ERISA or the Code to be, for purposes of the fiduciary
standards or the prohibited transactions provisions of ERISA or Section 4975 of
the Code assets of any Restricted Entity, (B) cause a non-exempt "prohibited
transaction" (as defined in Section 4975(c) of the Code or within the meaning of
Section 406 of ERISA) to occur, (C) cause the Partnership to become with respect
to any Restricted Entity a "party in interest" (as defined in Section 3(14) of
ERISA) or a "disqualified person" (as defined in Section 4975(e) of the Code) or
(D) cause the Partnership to be jointly and severally liable for any obligation
arising under ERISA or the Code with respect to any "employee benefit plan" as
defined in and subject to ERISA or any "plan" as defined in Section 4975 of the
Code; or (g) if the intended transferee is a Restricted Entity. Any purported
transfer described in this Section 9.3 shall be null and void ab initio.
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9.4 EFFECTIVE DATES OF TRANSFERS.
(a) Transfers pursuant to this Article 9 may be made on any day, but
for purposes of this Agreement, the effective date of any such transfer
shall be (i) the first day of the month in which such transfer occurred if
such transfer occurred on or prior to the fifteenth calendar day of a
month, or (ii) the first day of the month immediately following the month
in which such transfer occurred, if such transfer occurred after the
fifteenth calendar day of a month, or such other date determined by the
General Partner pursuant to such convention as may be administratively
feasible and consistent with applicable law.
(b) If any Partnership Interest or Unit is transferred or assigned in
compliance with the provisions of this Article 9, on any day other than the
first day of a calendar year, then Net Income, Net Loss, each item thereof
and all other items attributable to such Partnership Interest or Unit for
such year shall be allocated to the transferor, and, in the case of a
transfer or assignment other than a redemption, to the transferee, by
taking into account their varying interests during such year in accordance
with Section 706(d) of the Code, using any method permitted thereunder.
All distributions pursuant to Section 6.2 hereof attributable to such
transferred Partnership Interests or Units (A) with respect to which the
Partnership Record Date is before the effective date of such transfer
(other than a pledge, encumbrance, hypothecation, or mortgage) shall be
made to the transferor, (B) with respect to the first Partnership Record
Date after the effective date of such transfer (other than a pledge,
encumbrance, hypothecation or mortgage) shall be paid to the transferor and
to the transferee, ratably in accordance with their respective periods of
ownership of the Partnership Interest or Units transferred during the
period with respect to which such distribution is made, and (C) all
distributions after those described in (A) and (B) shall be made to the
transferee.
9.5 TRANSFER.
(a) The term "transfer" when used in this Article 9 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
Person purports to assign its Partnership Interest or any portion thereof
(including Units) to another Person, and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.
(b) The General Partner is hereby authorized on behalf of each of the
Partners to amend this Agreement (including the schedules hereto) to
reflect the admission of any transferee of a Partnership Interest as a
substituted Limited Partner in accordance with the provisions of this
Article 9.
(c) No Partnership Interest or Unit shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in
this Article 9. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article 9 shall be null and void
ab initio.
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ARTICLE 10
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
10.1 NO PARTICIPATION IN MANAGEMENT. No Limited Partner, in its capacity as
such, shall take part in the management of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. Any rights expressly granted to the Limited
Partners in this Agreement shall not be deemed to be rights relating to the
management of the Partnership's business.
10.2 BANKRUPTCY OF A LIMITED PARTNER. The Bankruptcy of any Limited Partner
shall not cause a dissolution of the Partnership, but the rights of such Limited
Partner to share in the Net Profits or Net Losses of the Partnership and to
receive distributions of Partnership funds shall, on the happening of such
event, devolve on its successors or assigns, subject to the terms and conditions
of this Agreement, and the Partnership shall continue as a limited partnership.
In no event, however, shall such assignee(s) become a substituted Limited
Partner except in accordance with Article 9 hereof.
10.3 NO WITHDRAWAL. No Limited Partner may withdraw from the Partnership
without the prior written consent of the General Partner, other than as provided
in Article 9 hereof.
10.4 CONFLICTS. The Partners recognize that the Limited Partners and their
Affiliates (other than the General Partner) have or may have other business
interests, activities and investments, some of which may be in conflict or
competition with the business of the Partnership, and that such Persons are
entitled to carry on such other business interests, activities and investments.
In deciding whether to take any actions in such capacity, such Limited Partners
and their Affiliates may, but shall be under no obligation to, consider the
separate interests of the Partnership and shall have no fiduciary obligations to
the Partnership and shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by the other Partners in
connection with such actions except for damages for losses sustained or
liabilities incurred which result from a Limited Partner materially breaching a
representation, warranty or covenant hereunder or to the extent provided in the
Formation Agreement or other Transaction Agreements; nor shall the Partnership
or the General Partner be under any obligation to consider the separate
interests of the Limited Partners and their Affiliates in such capacity have any
fiduciary obligations to the Limited Partners and their Affiliates in such
capacity or be liable for monetary damages for losses sustained, liabilities
incurred or benefits not derived by the Limited Partners and their Affiliates in
such capacity arising from actions or omissions taken by the Partnership. The
Limited Partners and their Affiliates may engage in or possess an interest in
any other business or venture of any kind, independently or with others, on
their own behalf or on behalf of other entities with which they are affiliated
or associated, and such persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to offer any interest
in such activities to the Partnership or to any Partner. Neither the Partnership
nor any Partner shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived
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therefrom, and the pursuit of such activities, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper.
10.5 PROVISION OF INFORMATION.
(a) With respect to any information required to be provided to the
Limited Partners pursuant to Section 17-305 (or any successor thereto) of
the Act: (i) the cost of preparing or providing any such information
(including, without limitation, fees paid to any person or entity in
connection therewith) shall be paid by the requesting Partner and in no
event shall such information be required to be given to the requesting
Partner until such payment has been made to the Partnership; (ii) in no
event shall any financial statements of the Partnership be required to be
provided except for such statements as have already been prepared or are
otherwise required to be provided to the Limited Partners under this
Agreement and in no event shall any statements which have been prepared be
required to be audited, reviewed or otherwise examined by a certified
public accountant, if the statements are not otherwise required to be so
audited, reviewed or examined pursuant to the provisions of this Agreement;
and (iii) in no event shall such information be required to be furnished
until forty-five (45) days after such request and unless the information is
already in the possession of the Partnership.
(b) In addition to other rights provided by this Agreement or by the
Act, each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner's interest as a limited partner in the
Partnership, upon written demand with a statement of the purpose of such
demand and at such Limited Partner's own expense (excluding copying and
administrative expenses of the General Partner):
(1) to obtain a copy of the most recent annual and quarterly
reports and current reports on Form 8-K filed with the SEC
by the General Partner pursuant to the Securities Exchange
Act of 1934;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each fiscal year of the
Partnership;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner; and
(4) to obtain a copy of this Agreement and the Certificate,
together with executed copies of all powers of attorney
pursuant to which this Agreement and the Certificate have
been executed.
(c) Notwithstanding any other provision of this Section 10.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that is not material to the
Limited Partners and that (i) the General Partner reasonably believes to be
in the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best interests of
the
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Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third
party to keep confidential.
10.6 LIMITED PARTNER REPRESENTATIVE. Except for actions to be taken by
the Limited Partners under Section 9.1 or with respect to Sections 3.2(a) and
3.2(b), Starwood Mezzanine is hereby appointed as the Limited Partner
Representative. A Majority-In-Interest of the Limited Partners shall have the
right, at any time, within their sole discretion, to replace the Limited Partner
Representative, or to appoint a temporary substitute to act for a Limited
Partner Representative unable to act. Any appointment of a Limited Partner
Representative made hereunder shall remain effective until rescinded in a
writing delivered to the General Partner via certified mail, registered
overnight express mail or telecopy, and the General Partner shall have the right
and authority to rely (and shall be fully protected in so doing) on the actions
taken and directions given by such Limited Partner Representative, without any
further evidence of their authority or further action by the Limited Partners.
The General Partner shall send copies of all notices received by it pursuant to
Section 6.6 to each Limited Partner requesting the same.
10.7 POWER OF ATTORNEY.
(a) Each Limited Partner constitutes and appoints the General
Partner, any Liquidating Trustee and authorized officers and attorneys-in-
fact of each, and each of those acting singly, in each case with full power
of substitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place and stead to: execute, swear
to, acknowledge, deliver, file and record in the appropriate public offices
(i) all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidating Trustee
deems appropriate or necessary to form, qualify or continue the existence
or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the
State of Delaware and in all other jurisdictions in which the Partnership
may conduct business or own property; (ii) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with this
terms; (iii) all conveyances and other instruments or documents that the
General Partner deems appropriate or necessary to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation; and (iv) all
instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to the provisions of this Agreement or the Capital
Contribution of any Partner.
(b) The foregoing power of attorney is irrevocable and a power
coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner to act as
contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive the death or incompetency
of a Limited Partner to the effect and extent permitted by law, subsequent
incapacity of any Limited Partner and the transfer of all or any portion of
such Limited Partner's Partnership Interests and shall extend to such
Limited Partner's heirs, successors, assigns and personal representatives.
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(c) Nothing contained in this Section 10.7 shall be construed as
authorizing the General Partner to amend this Agreement except in
accordance with Article 11 hereof.
10.8 OWNERSHIP OF SHARES.
(a) Each Limited Partner and holder of Units hereby agrees to provide
the General Partner within fifteen (15) days of any written request
therefor, a statement, to the best of its knowledge, describing the number
of Shares actually or constructively owned by such Limited Partner or
holder of Units and all direct and indirect owners of such Limited Partner
or holder for purposes of the REIT Requirements as determined under Section
318(a) of the Code, as modified by Section 856(d)(5) of the Code, or
Section 544 of the Code, as modified by Section 856(h) of the Code.
(b) Each Limited Partner and holder of Units (i) hereby covenants
that, without the prior written consent of the General Partner (which
consent shall not be unreasonably withheld or delayed) it will not acquire
and it will use all reasonable efforts to cause its direct or indirect
owners not to acquire any Shares or any rights to acquire Shares and (ii)
except to the extent that the General Partner provides prior written
consent, hereby represents, warrants and covenants that (I) it is not and
will not become a Restricted Entity, (II) no non-exempt "prohibited
transaction" (as defined in Section 4975(c) of the Code or within the
meaning of Section 406 of ERISA) has occurred or will occur that would not
have occurred or occur if the Limited Partner or holder of Units and its
Affiliates were not Limited Partners and were not holders of Units, (III)
the Partnership has not become and will not become with respect to any
Restricted Entity, a "party in interest" (as defined in Section 3(14) of
ERISA) or a "disqualified person" (as defined in Section 4975(e) of the
Code) which the Partnership would not have become or be if the Limited
Partner or holder of Units and its Affiliates were not Limited Partners and
were not holders of Units, and (IV) the Partnership has not and will not
become jointly and severally liable for any obligations arising under ERISA
or the Code with respect to any "employee benefit plan" as defined in and
subject to ERISA or any "plan" as defined in the Code for which the
Partnership has not become or would not be liable if the Limited Partner or
holder of Units and its Affiliate were not Limited Partners and were not
holders of Units.
10.9 WAIVER OF FIDUCIARY DUTY. Each Limited Partner and holder of Units
hereby waives, to the maximum extent permitted under law, any and all fiduciary
duties of the General Partner to each, all or any combination of them and hereby
agrees that the General Partner may, but is under no obligation to, take their
interests into account in performing or refraining from performing any act
permitted under this Agreement.
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ARTICLE 11
AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS
11.1 AMENDMENTS.
(a) This Agreement may not be amended unless such amendment is
approved by the General Partner with the Consent of the Limited Partners,
except provided below in this Section 11.1.
(b) Notwithstanding Section 11.1(a), the General Partner shall have
the power, without the consent of the Limited Partners but after five (5)
business days notice to the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner for the
benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination or
withdrawal of Partners after the date hereof in accordance
with Section 4.1(d) or Article 9 of this Agreement, provided
that the General Partner shall not be required to give the
notice referred to in the first paragraph of this subsection
(b) in respect of a transfer of Partnership Interests or
Units upon the exercise of Rights;
(3) to reflect a change that is of an inconsequential nature
(including changes to maintain the REIT Requirements) and
does not adversely affect the Limited Partners, or to cure
any ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other
provisions, or make any other changes with respect to
matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this
Agreement;
(4) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in
federal or state law; and
(5) to prevent all or any portion of the assets of the
Partnership from being deemed pursuant to United States
Department of Labor Regulation Section 2510.3-101 or
otherwise pursuant to ERISA or the Code to be, for any
purpose of ERISA or Section 4975 of the Code, assets of any
Restricted Entity.
43
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(c) Notwithstanding Sections 11.1(a) and (b) hereof, this Agreement
shall not be amended without the prior written consent of each Partner
adversely affected if such amendment would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest, (ii) modify
the limited liability of a Limited Partner, (iii) alter rights of the
Partners to receive allocations and distributions pursuant to Article 6 or
Section 8.1 hereof, (iv) alter or modify the Rights set forth in the
Exchange Rights Agreement or the Registration Rights Agreement except in
compliance therewith, (v) amend this Section 11.1(c), (vi) alter such
Partner's rights to transfer its Partnership Interests or (vii) amend
Sections 7.8, 7.9, 10.8 or 11.2(e) hereof.
11.2 MEETINGS OF THE PARTNERS; NOTICES TO PARTNERS.
(a) Meetings of Partners may be called by the General Partner or by
any Limited Partner to act on any matter specified herein or in the Act to
be voted on or consented to by the Partners. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall
be given to all Partners not less than seven (7) business days prior to the
date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or consent of the Limited Partners is permitted
or required under this Agreement, such vote or consent may be given at a
meeting of Partners or may be given in accordance with the procedure
prescribed in Section 11.2(b) hereof.
(b) Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth
the action so taken is signed by the General Partner and such percentage or
number of the Limited Partners as is expressly required by this Agreement.
Such consent may be in one instrument or in several instruments, and shall
have the same force and effect as a vote of the Partners. Such consent
shall be filed with the General Partner and copies thereof delivered to all
Partners. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
(c) Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of
the Limited Partner executing it. No such proxy and no such revocation
shall be effective unless a copy thereof has been delivered to the General
Partner.
(d) Whenever the consent of the Limited Partners is required
hereunder, the General Partner shall provide a notice to each Partner who
is a Limited Partner on the date the notice is given setting forth the
matter(s) as to which it proposes to seek such consent at least five (5)
business days in advance of the date upon which such consent is sought.
44
<PAGE>
(e) The General Partner also shall provide the Limited Partners with
quarterly tax projections for the Partnership.
ARTICLE 12
GENERAL PROVISIONS
12.1 NO LIABILITY OF DIRECTORS AND OTHERS. Notwithstanding anything to
the contrary contained herein, no recourse shall be had by the Partnership or
any Partner against any trustee, director, shareholder, officer, employee, agent
or attorney of the General Partner for any act or omission of the General
Partner or any obligations or liability of the General Partner under this
Agreement, and none of the foregoing shall have any personal liability for or
with respect to any of the foregoing; provided that the foregoing shall not
relieve any trustee, officer or director of the General Partner of any liability
in his capacity as such.
12.2 NOTICES. All notices, offers or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and may be
personally served or sent by United States mail and shall be deemed to have been
given when delivered in person or three (3) business days after deposit in
United States mail, registered or certified, postage prepaid and properly
addressed by or to the appropriate party. For purposes of this Section 12.2,
the addresses of the parties hereto shall be as set forth in Exhibit C hereto.
The address of any party hereto may be changed by a notice in writing given in
accordance with the provisions hereof.
12.3 CONTROLLING LAW. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of Delaware,
notwithstanding any conflict-of-laws doctrines of any state or other
jurisdiction to the contrary. Each of the parties hereto irrevocably submits
and consents to the jurisdiction of the United States District Court for the
Central District of California in connection with any action or proceeding
arising out of or relating to this Agreement and irrevocably waives any immunity
from jurisdiction thereof and any claim of proper venue, forum non conveniens or
any similar basis to which it might otherwise be entitled in any such action or
proceeding.
12.4 EXECUTION OF COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually, or taken together,
shall bear the signature of all of the parties reflected hereon as the
signatories.
45
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12.5 SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
12.6 ENTIRE AGREEMENT. This Agreement (together with the Exhibits hereto)
and the Formation Agreement and the Exchange Rights Agreement contain the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The parties hereto intend that this Agreement be
treated as a separate and distinct agreement and as not being part of any other
agreement (other than the Formation Agreement) arrangement, partnership or joint
venture. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
12.7 PARAGRAPH HEADINGS. The paragraph headings in this Agreement are for
convenience and they form no part of this Agreement and shall not affect its
interpretation.
12.8 GENDER, ETC. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate. The term "including" shall mean "including,
but not limited to".
12.9 NUMBER OF DAYS. In computing the number of days (other than business
days and trading days) for purposes of this Agreement, all days shall be
counted, including Saturdays, Sundays and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday or holiday on which
national banks are or may elect to be closed, then the final day shall be deemed
to be the next day which is not a Saturday, Sunday or such holiday.
12.10 PARTNERS NOT AGENTS. Nothing contained herein shall be construed to
constitute any Partner the agent of another Partner, except as specifically
provided herein, or in any manner to limit the Limited Partners in the carrying
on of their own respective businesses or activities.
12.11 ASSURANCES. Each of the Partners shall hereafter execute and
deliver such further instruments and do such further acts and things as may
reasonably required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
12.12 WAIVER OF PARTITION. Each Partner hereby waives any right such
Partner may have to partition its interest in the Partnership or any property of
the Partnership.
12.13 ANGELES PARTICIPATING MORTGAGE TRUST. The name "Angeles
Participating Mortgage Trust" is a designation of APT and its Trustees (as
Trustees but not personally) under the Declaration of Trust, and all persons
dealing with APT shall look solely to APT's assets for the enforcement of any
claims against APT, and the trustees, officers, agents and security
46
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holders of APT assume no personal liability for obligations entered into on
behalf of APT and their respective individual assets shall not be subject to the
claims of any person relating to such obligations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed on their behalf as of the date first above
written.
GENERAL PARTNER:
ANGELES PARTICIPATING MORTGAGE TRUST,
a California business trust
By: _________________________________
Its: _____________________________
LIMITED PARTNER:
STARWOOD MEZZANINE INVESTORS,
L.P.
By: Starwood Capital Group,
L.P.
By: BSS Capital Partners,
L.P.
By: Sternlicht Holdings
II, Inc.
By:
________________
Its:
___________
47
<PAGE>
EXHIBIT A
DESCRIPTION OF CERTIFICATES AND
UNDERLYING DEBT INSTRUMENTS
1. Participation and Servicing Agreement between Shearson Lehman
Commercial Paper Incorporated and Empire of America Federal Savings
Bank dated as of March 1, 1988.
2. Assignment and Assumption of Participation and Servicing Agreement
between Resolution Trust Corporation as Receiver of Empire Federal
Savings Bank of America and Key Bank of New York ("Servicer") dated
January 8, 1992.
3. Amendment to Participation and Servicing Agreement between Servicer
and Starwood Mezzanine Investors, L.P. ("SMI") dated as of February
15, 1995 (the Participation and Servicing Agreement as assigned as of
January 8, 1992 and as amended as of February 15, 1995 is referred to
herein as the "Servicing Agreement").
4. 100% Pass-Through Ownership Certificate No. 5, Series 1988-10, listing
SMI as the registered owner, issued pursuant to the Servicing
Agreement.
5. Loan Purchase Agreement between Xerox Financial Services Life
Insurance Company ("Xerox") and Starwood Capital Group, L.P. dated as
of November 7, 1994.
6. First Amendment to Loan Purchase Agreement between Xerox and SMI dated
as of January 31, 1995.
7. Assignment and Assumption Agreement between Xerox and SMI dated as of
February 15, 1995.
8. Estoppel Letter executed by Frankel-Warwick Limited Partnership
("Frankel") and delivered to SMI dated January 18, 1995.
9. Estoppel Letter executed by Servicer and delivered to SMI dated
February 8, 1995.
10. Policy of title insurance issued by Commonwealth Land Title Insurance
to The Western Saving Fund Society of Philadelphia dated January 16,
1979; Title Endorsement listing Empire of America, F.S.A. as the
insured dated August 31, 1983; Title Endorsement listing Key Bank of
New York as the insured dated February 16, 1995.
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11. Promissory Note dated June 17, 1977 executed by Frankel to the order
of Girard Trust Bank ("Girard").
12. Mortgage between Frankel and Girard dated June 17, 1977.
13. Promissory Note and Mortgage Modification Agreement between Frankel
and Girard dated January 16, 1979.
14. Assignment of Rents and Lessor's Interest in Leases between Frankel
and Girard dated June 17, 1977.
15. UCC-1 Financing Statements and UCC-3 Continuation Statements.
16. Ground Lease between Frankel and The Mutual Benefit Life Insurance
Company ("Mutual") dated as of August 21, 1978.
17. First Amendment to Ground Lease between Frankel and The Mutual Benefit
Life Insurance Company in Rehabilitation dated as of December 11,
1992.
18. Ground Leaseback between Frankel and Mutual dated as of August 21,
1978.
19. First Amendment to Ground Leaseback between Frankel and Mutual dated
August 1989.
20. Mortgage from Frankel to Mutual dated April 7, 1978.
21. Promissory Note from Frankel to the order of Mutual dated April 7,
1978.
22. Amendment to Promissory Note between Frankel and Mutual dated January
16, 1979.
23. Second Amendment to Mortgage and Promissory Note between Frankel and
The Mutual Benefit Life Insurance Company in Rehabilitation dated
December 11, 1992.
49
<PAGE>
EXHIBIT B
PERCENTAGE INTERESTS OF PARTNERS
DATE: AS OF SEPTEMBER 26, 1996
<TABLE>
<CAPTION>
Name of Partner Percentage Interest Units*
- --------------- -------------------- -----
<S> <C> <C>
Angeles Participating Mortgage 8.05% 400,000
Trust, as General Partner
Starwood Mezzanine 91.95% 4,568,944
Investors, L.P.
</TABLE>
* To determine the number of Units to be issued to each Partner as of
September 26, 1996, the value of the Shares was deemed to be $1.00 per Share.
50
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EXHIBIT C
ADDRESSES OF PARTIES
Name of Partner Notice Address
- --------------- --------------
Angeles Participating 340 N. Westlake Boulevard
Mortgage Trust Suite 230
Westlake Village, California 91362
Attention: Mr. Ronald J. Consiglio
Fax No: (805) 449-1336
Starwood Mezzanine Investors, L.P. c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No: (203) 861-2101
51
<PAGE>
EXHIBIT 99.7
EXCHANGE RIGHTS AGREEMENT
This Exchange Rights Agreement (this "Agreement") is made and entered into
as of this 26th day of September, 1996, by and between Angeles Participating
Mortgage Trust, a California business trust (the "Trust"), and Starwood
Mezzanine Investors, L.P., a Delaware limited partnership ("Starwood
Mezzanine"). Unless otherwise indicated, capitalized terms used herein are used
herein as defined in Section 11.
WHEREAS, pursuant to a Formation Agreement, dated September 26, 1996, by
and between the Trust and Starwood Mezzanine (the "Formation Agreement"), on the
date hereof, the Trust and Starwood Mezzanine are making capital contributions
to APMT Limited Partnership, a Delaware limited partnership (the "Partnership")
in return for the issuance by the Partnership to the Trust and to Starwood
Mezzanine of Units (as such term is defined in the Limited Partnership Agreement
of the Partnership, dated the date hereof (the "Partnership Agreement")) of the
Partnership (such Units issued by the Partnership to Starwood Mezzanine on the
date hereof, together with any Units of the Partnership issued to Starwood
Mezzanine after the date hereof being hereinafter called the "Units"); and
WHEREAS, pursuant to the Formation Agreement, the parties hereto are
entering into this Agreement to provide for the rights of Starwood Mezzanine to
tender Units in exchange for either Trust Shares (as hereinafter defined), cash
or a combination of Trust Shares and cash, on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Right to Tender Units.
(a) Upon the terms and subject to the conditions of this
Agreement, Starwood Mezzanine shall have the right to tender to the Trust the
outstanding Units.
(b) Notwithstanding any other provision of this Agreement to the
contrary, no Trust Shares or cash shall be issued or paid in respect of any
tender of Units (i) if, notwithstanding the provisions of Section 6 of this
Agreement, the right to tender Units and receive Trust Shares or cash would
result in the Trust not satisfying the REIT Requirements in any respect or would
result in any person or entity Beneficially Owning Trust Shares exceeding the
ownership limitation provisions of the REIT Requirements, (ii) prior to the
expiration or termination of the waiting period applicable to such exchange and
issuance, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as it may be amended from time to time, or (iii) prior to the receipt of
all governmental and regulatory approvals which are required to be obtained
prior to such tender and issuance or payment. In the event that the ability to
receive Trust Shares or cash would result in the Trust not satisfying the REIT
Requirements in any respect or would result in any person or entity Beneficially
Owning Trust Shares exceeding the ownership limitation provisions of the REIT
Requirements, and as a result thereof no Trust Shares or cash may be issued or
paid in respect of any tender of Units pursuant to Section 1(b)(i) above, the
parties hereto shall use their respective best efforts to restructure the terms
and
<PAGE>
provisions of this Agreement (and, if necessary, the Partnership Agreement and
the Registration Rights Agreement, dated the date hereof, between the Trust and
Starwood Mezzanine (the "Registration Rights Agreement"), or to agree to terms
and provisions in addition to such terms and provisions, so as to provide to
each such party the same substantive rights (or substantive rights as close
thereto as is reasonably practicable) as those provided by this Agreement, the
Partnership Agreement, the Formation Agreement and the Registration Rights
Agreement.
(c) The right to exchange Units pursuant to this Agreement
constitute a continuous offer and may not be withdrawn, amended or modified by
the Trust without the prior written consent of Starwood Mezzanine; provided that
any withdrawal, amendment or modification that does not adversely affect
Starwood Mezzanine may be effected without the consent of Starwood Mezzanine.
Section 2. Acceptance of Tender; Election of Method of Payment for Tendered
Units.
(a) Upon the terms and subject to the conditions of this
Agreement, the Trust shall accept Units validly tendered in proper form and
meeting all of the requirements of this Agreement. In order for Units to be
validly tendered pursuant to this Agreement, Starwood Mezzanine shall deliver to
the Trust, at the address provided pursuant to Section 10, both of the
following: (i) a completed and duly executed Letter of Transmittal, in the form
attached hereto as Exhibit A (the "Letter of Transmittal") and any other
documents required by the Letter of Transmittal and (ii) a calculation, to the
best knowledge of Starwood Mezzanine after due inquiry (together with such
supporting documentation as the Trust may reasonably request at the expense of
Starwood Mezzanine), of the maximum number of Trust Shares that may be issued to
Starwood without causing either (x) the Trust to not satisfy the REIT
Requirements in any respect or (y) any person or entity to Beneficially Own
Trust Shares exceeding the ownership limitation provisions of the REIT
Requirements. The Trust shall make all determinations as to the validity and
form of any tender of Units in accordance with the provisions of this Agreement
and upon rejection of a tender shall give Starwood Mezzanine written notice of
such rejection, which shall include the reasons therefor.
(b) Unless otherwise determined by agreement of the Trust and
Starwood Mezzanine, tenders of Units pursuant to this Agreement shall be
irrevocable and shall not be subject to withdrawal or modification; provided
that if the Trust makes the Trust Share Election (as hereinafter defined) with
respect to a tender, then, within three (3) days after such election, Starwood
Mezzanine may elect to revoke such tender so long as (i) no public disclosure of
such tender has been made prior to such revocation and (ii) Starwood Mezzanine
reimburses the Trust for all reasonable costs and expenses incurred in
connection with such tender.
(c) Within fifteen (15) days after the valid tender pursuant to
this Agreement of Units, the Independent Trustees shall make an election to pay
for such Units by either (i) Trust Shares (the "Trust Share Election"), (ii)
cash (the "Cash Election") or (iii) a combination of Trust Shares and cash (the
"Combined Election"). Such election shall be made by the a majority of the
Independent Trustees on the Board of Trustees in their sole discretion. If the
Trust fails to so elect and notify Starwood Mezzanine within such fifteen (15)
day period, the Trust shall be deemed to have made the Cash Election.
2
<PAGE>
Section 3. Trust Share Election.
(a) If with respect to any tender of Units pursuant to this
Agreement, the Trust makes the Trust Share Election, then within twenty (20)
days after such tender the Trust shall deliver to Starwood Mezzanine one (1)
Trust Share for each Unit validly tendered pursuant to the provisions of this
Agreement.
(b) No fractional Trust Shares or scrip representing fractional
Trust Shares shall be issued upon exchange of Units pursuant to this Agreement.
If more than one Letter of Transmittal shall be delivered at one time by
Starwood Mezzanine, the number of full Trust Shares which shall be issuable upon
exchange of the Units tendered thereby shall be computed on the basis of the
aggregate number of Units so tendered. Instead of any fractional Trust Shares
which would otherwise be issuable upon exchange of any Units, the Trust shall
pay a cash adjustment in respect of such fraction in an amount equal to the same
fraction of the Trust Share Closing Price on the last business day preceding the
date of exchange.
(c) If Starwood Mezzanine exchanges Units pursuant to this
Agreement, the Trust shall pay any documentary, stamp or similar issue or
transfer tax due on any issue of Trust Shares upon such exchange. Starwood
Mezzanine, however, shall (i) pay to the Trust the amount of any additional
documentary, stamp or similar issue or transfer tax which is due (or shall
establish to the satisfaction of the Trust the payment thereof) as a result of
Trust Shares being issued in a name other than the name of Starwood Mezzanine
and (ii) be responsible for all income or other taxes as a result of such
exchange.
Section 4. Cash Election. If with respect to any tender of Units pursuant
to this Agreement, the Trust makes or is deemed to have made the Cash Election,
then within twenty (20) days after such tender the Trust shall pay to Starwood
Mezzanine an aggregate amount of cash (the "Aggregate Cash Payment") equal to
the product of (i) the number of Trust Shares which would have been delivered to
Starwood Mezzanine if the Trust had made the Trust Share Election with respect
to such tender and (ii) the average Trust Share Closing Price for the ten (10)
trading day period ending one day prior to the date of such tender.
Section 5. Combined Election.
(a) If with respect to any tender of Units pursuant to this
Agreement, the Trust shall make the Combined Election, then in accordance with
Section 2(c) above, the Trust shall notify Starwood Mezzanine of the number of
such tendered Units which will be exchanged for cash (the "Cash Units") and the
number of such tendered Units which will be exchanged for Trust Shares (the
"Trust Share Units"). Within twenty (20) days after such tender, the Trust shall
(i) pay to Starwood Mezzanine, in respect of each Cash Unit validly tendered
pursuant to the provisions of this Agreement, an amount of cash equal to the
product of the Cash Units and the average Trust Share Closing Price for the ten
trading day period ending one (1) day prior to the date of such tender and (iii)
deliver to Starwood Mezzanine one (1) Trust Share for each Trust Share Unit
validly tendered pursuant to the provisions of this Agreement.
(b) The provisions of Sections 3(b) and 3(c) of this Agreement
shall apply to the issuance of Trust Shares pursuant to Section 5(a) of this
Agreement.
3
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Section 6. REIT Requirements. If Starwood Mezzanine validly tenders Units
pursuant to the provisions of this Agreement, the Trust makes the Trust Share
Election or the Combined Election with respect to such tender, as a result of
the ownership limitation provisions of the REIT Requirements, Starwood Mezzanine
cannot receive the full number of Trust Shares otherwise issuable to Starwood
Mezzanine pursuant to such tender and such election (without giving effect to
such ownership limitations), then subject to the other terms and conditions of
this Agreement, Starwood Mezzanine shall be entitled to receive the number of
Trust Shares which it can receive pursuant to such tender, such election and
such ownership limitations.
Section 7. Representations of Starwood Mezzanine. Each tender of Units
shall constitute a representation and warranty by Starwood Mezzanine of each of
the representations and warranties set forth in the form of Letter of
Transmittal. Without limiting the generality of the foregoing, unless, at the
time of a tender for exchange of Units pursuant to this Agreement, a
registration statement relating to any Trust Shares to be delivered upon such
tender is effective under the Securities Act of 1933, as amended (the
"Securities Act"), such tender shall constitute a representation and warranty by
Starwood Mezzanine to the Trust that Starwood Mezzanine (i) is an "accredited
investor" within the meaning of Rule 501 under the Securities Act, (ii) has
sufficient knowledge and experience in financial and business matters and in
investing in entities similar to the Partnership and the Trust so as to be able
to evaluate the risks and merits of its investment in the Partnership and the
Trust and it is able financially to bear the risks thereof, (iii) has had an
opportunity to discuss the business, management and financial affairs of the
Trust and the Partnership with the management of the Trust and the Partnership,
and (iv) understands that the Trust Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act and such Trust Shares
must be held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and applicable state securities laws or is exempt from
such registration.
Section 8. Status of Starwood Mezzanine. Until Starwood Mezzanine becomes a
holder of record of the Trust Shares issued in exchange for the tendered Units
(in the case of a Trust Share Election or a Combined Election) or until Starwood
Mezzanine has received cash in exchange therefor (in the case of a Cash Election
or a Combined Election), Starwood Mezzanine shall continue to hold and own such
Units for all purposes of the Partnership Agreement. In the case of a Trust
Share Election or a Combined Election, Starwood Mezzanine shall not have any
rights as a shareholder of the Trust in respect of such Trust Shares until
Starwood Mezzanine becomes a holder of record of such Trust Shares.
Section 9. Reservation of Shares; Closing of Transfer Books.
(a) The Trust shall reserve and shall at all times have reserved
out of its authorized but unissued Trust Shares, solely for the purpose of
effecting the exchange of Units pursuant to this Agreement, enough Trust Shares
to permit the exchange of the then outstanding Units. All Trust Shares which may
be issued upon exchange of Units shall be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof other than income taxes resulting from such exchange.
4
<PAGE>
(b) The Trust shall not close its transfer books so as to prevent
the timely issuance of Trust Shares pursuant to this Agreement.
Section 10. Notices. All notices, documents and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail or when sent by facsimile transmission, or four
(4) days after being mailed (by registered mail, return receipt requested) to a
party at the following address (or to such other address as such party may have
specified by notice given to the other parties pursuant to this provision):
If to the Trust to:
Angeles Participating Mortgage Trust
340 N. Westlake Boulevard
Suite 230
Westlake Village, CA 91362
Attention: Mr. Ronald J. Consiglio
Fax No.: (805) 449-1336
with a copy to:
Katten Muchin & Zavis
1999 Avenue of the Stars
Suite 1400
Los Angeles, CA 90067
Attention: James K. Baer, Esq.
Fax No.: (310) 788-4471
If to Starwood Mezzanine, to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with a copy to:
Rinaldi & Associates
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Ellis Rinaldi, Esq.
Fax No.: (203) 861-2122
Section 11. Definitions. For purposes of this Agreement:
5
<PAGE>
"Beneficially Owning" means owning Trust Shares directly, indirectly or
constructively by a person or entity through the application of Section 318(a)
of the Code, as modified by Section 856(d) (5) of the Code, or Section 544 of
the Code, as modified by Section 856(h) of the Code. The term "Beneficially Own"
shall have a correlative meaning.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Declaration of Trust" means the Declaration of Trust of the Trust,
originally made and entered into as of April 15, 1988, as restated as of July
18, 1988, as further restated as of September 26, 1996, and as may be amended
modified, supplemented, restated or superseded from time to time after the date
of this Agreement.
"Independent Trustees" shall mean a Trustee of the Trust who is (i) not an
officer, employee, agent, shareholder (direct or indirect) or representative of
the Trust, Starwood Mezzanine, or Persons which directly or indirectly through
one or more intermediaries control, or is controlled by or is under common
control with Starwood Mezzanine, (ii) not a spouse, sibling, lineal descendant,
ancestor, aunt, uncle or first cousin of any of the aforesaid Persons (including
in-laws and adopted relationships), and (iii) free of any relationship that
would interfere with the exercise of independent judgment; provided, however,
that Ronald J. Consiglio, J. D'Arcy Chisholm and Jack E. McDonald shall be
considered Independent Trustees hereunder.
"REIT Requirements" shall mean the requirements for the Trust to (i)
qualify as a REIT under the Code and the rules and regulations promulgated
thereunder, and (ii) avoid any federal income or excise tax liability. "REIT
Requirements" shall also include the ownership limitation provisions set forth
in Section 6.13 of the Declaration of Trust of the Trust.
"Trust Share Closing Price" shall mean, with respect to a particular date,
the last reported sales price on such date or, in case no such reported sale
takes place on such date, the average of the reported closing bid and asked
prices on such date, in either case on the American Stock Exchange, or if the
Trust Shares are not then listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Trust Shares are then listed
or admitted to trading or, if not then listed or admitted to trading on any
national securities exchange, the closing sale price on such date of the Trust
Shares or, in case no reported sale takes place on such date then, the average
of the closing bid and asked prices on such date, on NASDAQ or any comparable
system. If the Trust Shares are not then quoted on NASDAQ or any comparable
system, the Board of Trustees of the Trust shall in good faith determine the
Trust Share Closing Price.
"Trust Shares" means the Class A Shares, par value $1.00 per share, of the
Trust.
Section 12. Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions
6
<PAGE>
would result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable.
Section 13. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors or assigns. Notwithstanding prohibitions on assignment contained
herein, in the event that Starwood Mezzanine transfers record ownership of Units
to any of its direct or indirect partners, this Agreement shall be assigned to
such partners; provided that each such partner agrees to be bound by all of the
terms and conditions of this Agreement.
Section 14. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when the Trust and Starwood
Mezzanine shall have each executed a counterpart of this Agreement.
Section 15. Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 16. Exhibits. The Exhibits referred to in this Agreement shall be
construed with, and as an integral part of, this Agreement to the same extent as
if the same had been set forth verbatim herein.
Section 17. Entire Agreement; Amendments and Waivers. This Agreement,
including the Exhibits, and the Formation Agreement, the Partnership Agreement
and the Registration Rights Agreement contains the entire understanding of the
parties hereto with regard to the subject matter contained herein. In addition
to amendments and modifications permitted by Section 1(c), the parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement;
provided that any such amendment, modification or supplement shall be approved
by a majority of the Independent Trustees. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
Section 18. Governing Law. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
internal laws of the State of California, without regard to principles of
conflicts of laws as applied in the State of California or any other
jurisdiction which, if applied, would result in the application of any laws
other than the internal laws of the State of California.
Section 19. Angeles Participating Mortgage Trust. The parties hereto
understand and agree that the name "Angeles Participating Mortgage Trust" is a
designation of the Trust and its Trustees (as Trustees but not personally) under
the Declaration of Trust, and all persons dealing with the Trust shall look
solely to the Trust's assets for the enforcement of any claims against the
Trust, and that the Trustees, officers, agents and security holders of the Trust
assume
7
<PAGE>
no personal liability for obligations entered into on behalf of the Trust, and
their respective individual assets shall not be subject to the claims of any
person relating to such obligations.
Section 20. Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Central District of California in connection with any
action or proceeding arising out of or relating to this Agreement, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
ANGELES PARTICIPATING MORTGAGE TRUST, a California
business trust
By:
--------------------------------------------------
Name:
Title:
STARWOOD MEZZANINE PARTNERS, L.P.
By: STARWOOD CAPITAL GROUP, L.P., general partner
By: BSS CAPITAL PARTNERS, L.P., general partner
By: STERNLICHT HOLDINGS II, INC., general
partner
By:
---------------------------------
Name:
Title:
8
<PAGE>
EXHIBIT A TO
------------
EXCHANGE RIGHTS AGREEMENT
-------------------------
LETTER OF TRANSMITTAL
To Tender Units
Pursuant to the Exchange Rights Agreement
Dated as of September 26, 1996
TO: Angeles Participating Mortgage Trust
340 N. Westlake Boulevard
Suite 230
Westlake Village, CA 91362
Attention: Mr. Ronald J. Consiglio
Fax No.: (805) 449-1336
Description of Units
- --------------------------------------------------------------------------------
NAMES(S) AND ADDRESS(ES) UNITS TENDERED (ATTACH
OF REGISTERED OWNERS ADDITIONAL LIST IF
NECESSARY)
------------------------------------------------
Total
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Angeles Participating Mortgage Trust (the
"Trust") the above-described Units (as defined in the Exchange Rights Agreement
dated as of September 26, 1996 (the "Exchange Rights Agreement")) in accordance
with the terms and conditions of the Exchange Rights Agreement and this Letter
of Transmittal (which together constitute the "Offer"), receipt of which is
hereby acknowledged. All terms used herein but not defined herein are used as
defined in the Exchange Rights Agreement.
Subject to, and effective upon the issuance of Trust Shares and/or the
payment of cash, as the case may be, for the Units tendered hereby, the
undersigned hereby assigns and transfers to the Trust all right, title and
interest in and to all the Units that are being tendered hereby and irrevocably
constitutes and appoints the Trust (the "Unit Agent"), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) transfer such Units on the books of the
Partnership and (b) receive all rights, privileges and benefits, and any and all
obligations and liabilities appertaining thereto and otherwise exercise all
rights of beneficial ownership of such Units, all in accordance with the terms
of the Offer.
The undersigned hereby represents and warrants to the Trust that (i) the
undersigned has full power and authority to tender, sell, assign and transfer
the tendered Units and that upon payment therefor, the Trust will acquire
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and the same will not be subject to any adverse claim, (ii)
that the tender complies with each and every provision of Section 1 of the
Exchange Rights Agreement, and (iii) attached hereto is a calculation, to the
best knowledge of the undersigned after due inquiry (together with such
supporting documentation as the Trust may reasonably request at the expense of
Starwood Mezzanine, of the maximum number of Trust Shares that may be issued to
the undersigned without causing either (x) the Trust to not satisfy the REIT
Requirements in any respect or (y) any person or entity to Beneficially Own
Trust Shares exceeding the Ownership Limit. The undersigned will, upon request,
execute any additional documents deemed by the Trust to be reasonably necessary
or desirable to complete the sale, assignment and transfer of the tendered
Units.
Unless a registration statement relating to any Trust Shares to be
delivered to the undersigned is effective under the Securities Act of 1933, as
amended (the "Securities Act"), the undersigned hereby represents and warrants
to the Trust that the undersigned (i) is an "accredited investor" within the
meaning of Rule 501 under the Securities Act, (ii) has sufficient knowledge and
experience in financial and business matters and in investing in entities
similar to the Partnership and the Trust so as to be able to evaluate the risks
and merits of its investment in the Partnership and the Trust and it is able
financially to bear the risks thereof, (iii) has had an opportunity to discuss
the business, management and financial affairs of the Trust and the Partnership
with the management of the Trust and the Partnership, and (iv) understands that
any such Trust Shares have not been registered under
2
<PAGE>
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act and any such Trust
Shares must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act and applicable state securities laws or is
exempt from such registration. If not sold pursuant to an effective registration
statement, any such Trust Shares will bear an appropriate legend indicating that
such Trust Shares have not been registered under the Securities Act and resale
of such Trust Shares is restricted under applicable securities laws.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned.
The undersigned understands that, except as provided in Section 2(b) of the
Exchange Rights Agreement, a tender of Units pursuant to the Exchange Rights
Agreement is irrevocable and constitutes a binding agreement between the
undersigned and the Trust upon the terms and subject to the conditions of the
Exchange Rights Agreement.
Unless otherwise indicated under "Special Delivery Instructions", please
mail any Trust Shares issuable upon exchange of the Units tendered hereby (or,
if the Cash Election or the Combined Election is made, the cash payment payable
pursuant thereto) to the address(es) of the registered holder(s) appearing under
"Description of Units." In the event that the Special Delivery Instructions are
completed, please issue the Trust Shares (or, if the Cash Election or the
Combined Election is made, the cash payment payable pursuant thereto) in the
name of the registered holder(s) and transmit the same to the person or persons
so indicated.
The Trust and the undersigned agree that they will cooperate with each
other and will make, execute, acknowledge, deliver, record and file, or cause to
be made, executed, acknowledged, delivered, recorded and filed, at such times
and places as the other may reasonably deem necessary, all other and further
documents and instruments, and will take all other and further actions, as the
other may reasonably request from time to time in order to effectuate the
purposes and provisions of the tender made pursuant to this Letter of
Transmittal.
3
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if Trust Shares or the cash payment are to be sent to
someone other than the undersigned or to the undersigned at an address other
than that above.
Mail certificate(s) for Trust Shares or cash payment to:
Name
----------------------------------------------------------------------------
(please print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(include Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Tax Identification or Social Security Number)
SIGN HERE
Complete Substitute Form W-9 included
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature(s) of holder of Units)
(Must be signed by registered holder(s) as name(s) appear(s) on books and
records of the Partnership. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please set forth full title
and see instruction 4.
Dated
---------------------------------------------------------------------------
Name(s)
-------------------------------------------------------------------------
(please print)
Capacity
(Full Title)
--------------------------------------------------------------------
Address
-------------------------------------------------------------------------
(include Zip Code)
4
<PAGE>
Area Code and Tel. No.
----------------------------------------------------------
Tax Identification or
Social Security No.
-------------------------------------------------------------
(Complete Substitute Form W-9)
Guarantee of Signature(s)
(See Instruction 1)
Authorized
Signature
-----------------------------------------------------------------------
Name of
Firm
----------------------------------------------------------------------------
Dated
---------------------------------------------------------------------------
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Exchange Rights Agreement
1. GUARANTEE OF SIGNATURE. No signature guarantee on this Letter of
Transmittal is required unless the registered holder of the Units has completed
the box entitled "Special Delivery Instructions". In such case all signatures on
this Letter of Transmittal must be guaranteed by a member firm of any registered
national securities exchange in the United States or of the National Association
of Securities Dealers, Inc. or by a commercial bank or trust company (not a
savings bank or a savings and loan association) having an office, branch or
agency in the United States.
2. DELIVERY OF LETTER OF TRANSMITTAL. This Letter of Transmittal is
to be completed by the holder of Units. A properly completed and duly executed
Letter of Transmittal and any other documents required by this Letter of
Transmittal must be received by the Agent.
No alternative, conditional or contingent tenders will be accepted.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
Units tendered and/or other information required should be listed on a separate
schedule attached hereto.
4. SIGNATURES ON LETTER OF TRANSMITTAL. The signature must
correspond with the name as shown on the books and records of the Partnerships
without any change whatsoever.
If any of the Units tendered hereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
5
<PAGE>
If any tendered Units are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations.
If this Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, each person should so indicate
when signing, and proper evidence satisfactory to the Agent of their authority
so to act must be submitted.
5. SPECIAL DELIVERY INSTRUCTIONS. If a certificate for Trust Shares or
the cash payment is to be sent to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed.
6. WAIVER OF CONDITIONS. The Trust reserves the right to waive in its
sole discretion any of the specified conditions of the Offer in the case of the
Units tendered; provided that any such waiver shall not adversely affect any
holder of outstanding Units without the consent of such holder.
7. BACK-UP WITHHOLDING. Under the Federal income tax law, a person
surrendering Units must provide the Agent with his correct taxpayer
identification number ("TIN") on Substitute Form W-9 below unless an exemption
applies. If the correct TIN is not provided, a $50 penalty may be imposed by the
Internal Revenue Service and payments made in exchange for the surrendered Units
may be subject to back-up withholding of that rate provided by the Federal
income tax law (such rate being at the date of the Exchange Rights Agreement,
31%).
The TIN that must be provided is that of the registered holder of the
Units. The TIN for an individual is his social security number.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Exchange Rights Agreement and the
Letter of Transmittal may be directed to the Agent at the address set forth
above.
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a holder whose tendered Units are accepted
for payment is required by law to provide the Agent (as payer) with his correct
taxpayer identification number on Substitute Form W-9 below. If such holder is
an individual, the taxpayer identification number is his social security number.
If the Agent is not provided with the correct taxpayer identification number,
the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such holder with respect to
Units purchased pursuant to the Offer may be subject to back-up withholding.
If back-up withholding applies, the Agent is required to withhold, at that
rate provided by the Federal income tax law (such rate being at the date of the
Exchange Rights
6
<PAGE>
Agreement 31%), of any such payments made to the holder of Units. Trust Shares
otherwise deliverable hereunder may, at the expense (and with all risk of loss
for the account) of the undersigned, be sold to pay such amounts. Back-up
withholding is not an additional tax. Rather, the tax liability of persons
subject to back-up withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent back-up withholding on payments that are made to a holder of
Units purchased pursuant to the Offer, the holder is required to notify the
Agent of his correct taxpayer identification number by completing the form below
certifying that the taxpayer identification number provided on Substitute Form
W-9 is correct.
WHAT NUMBER TO GIVE THE AGENT
The holder is required to give the Agent the social security number or
employer identification number of the record owner of the Units.
7
<PAGE>
PAYER'S NAME: Angeles Participating Mortgage Trust
<TABLE>
<CAPTION>
==============================================================================================================
<S> <C> <C>
Substitute Part 1 - Please provide your TIN in the box at right and Social Security
Form W-9 certify by signing and dating below Number/Employer
Identification
Number
- --------------------------------------------------------------------------------------------------------------
Department of the Certification - Under the penalties of perjury, (i) I
Treasury/Internal certify that the information provided on this form is true,
Revenue Service correct and complete and (ii) I am not subject to backup
withholding because: (a) I am exempt from backup
Service withholding, or (b) I have not been notified by
the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding.
- --------------------------------------------------------------------------------------------------------------
Signature Date
==============================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP
WITHHOLDING OF THAT RATE PROVIDED BY THE FEDERAL INCOME TAX LAW (SUCH
RATE BEING AT THE DATE OF THE EXCHANGE RIGHTS AGREEMENT 31%) OF ANY
PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
8
<PAGE>
EXHIBIT 99.8
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into this 26th day of September, 1996, by and between Angeles Participating
Mortgage Trust, a California business trust (the "Trust"), and Starwood
Mezzanine Investors, L.P., a Delaware limited partnership ("Starwood
Mezzanine"). Unless otherwise indicated, capitalized terms used herein are
used herein as defined in Section 1.
RECITALS
--------
WHEREAS, pursuant to a Formation Agreement, dated September 26, 1996, by
and between the Trust and Starwood Mezzanine (the "Formation Agreement"), on the
date hereof, the Trust and Starwood Mezzanine are making capital contributions
to APMT Limited Partnership, a Delaware limited partnership (the "Partnership"),
in return for the issuance by the Partnership to the Trust and to Starwood
Mezzanine of Partnership Interests (as such term is defined in the Partnership
Agreement); and
WHEREAS, pursuant to the Formation Agreement, the parties hereto desire to
set forth the rights of Starwood Mezzanine and the obligations of the Trust to
cause the registration of the Registrable Securities pursuant to the Securities
Act;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND USAGE.
---------------------
1.1 DEFINITIONS. As used in this Agreement:
BENEFICIALLY OWNING. "BENEFICIALLY OWNING" means owning Trust Shares
directly, indirectly or constructively by a Person through the application of
Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, or
Section 544 of the Code, as modified by Section 856(h) of the Code.
CLASS A WARRANT. "CLASS A WARRANT" shall mean the warrant issued by the
Trust on March 15, 1994 for the purchase of up to 5,000,000 Trust Shares.
CODE. "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
COMMISSION. "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
CONTINUOUSLY EFFECTIVE. "CONTINUOUSLY EFFECTIVE", with respect to a
specified registration statement, shall mean that such registration statement
shall not cease to be effective and available for Transfers of Registrable
Securities thereunder for longer than either (i) any ten
<PAGE>
(10) consecutive business days, or (ii) an aggregate of fifteen (15) business
days during the period specified in the relevant provision of this Agreement.
DECLARATION OF TRUST. "DECLARATION OF TRUST" means the Declaration of
Trust of the Trust, originally made and entered into as of April 15, 1988, as
restated as of July 18, 1988, as further restated as of September 26, 1996, and
as may be amended, modified, restated and superseded from time to time after the
date of this Agreement.
DEMAND REGISTRATION. "DEMAND REGISTRATION" shall have the meaning set
forth in Section 2.1.
FORMATION AGREEMENT. "FORMATION AGREEMENT" shall have the meaning set
forth in the Recitals of this Agreement.
EXCHANGE ACT. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
EXCHANGE RIGHTS AGREEMENT. "EXCHANGE RIGHTS AGREEMENT" shall mean the
Exchange Rights Agreement, dated the date hereof, by and between the Trust
and Starwood Mezzanine.
INDEPENDENT TRUSTEES. "INDEPENDENT TRUSTEES" shall mean a Trustee of the
Trust who is (i) not an officer, employee, agent, shareholder (direct or
indirect) or representative of the Trust, Starwood Mezzanine, or Persons which
directly or indirectly through one or more intermediaries control, or is
controlled by or is under common control with Starwood Mezzanine, (ii) not a
spouse, sibling, lineal descendant, ancestor, aunt, uncle or first cousin of
any the aforesaid Persons (including in-laws and adopted relationships), and
(iii) free of any relationship that would interfere with the exercise of
independent judgment; provided, however, that Ronald J. Consiglio, J. D'Arcy
Chisholm and Jack E. McDonald shall be considered Independent Trustees
hereunder.
PERSON. "PERSON" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
PIGGYBACK REGISTRATION. "PIGGYBACK REGISTRATION" shall have the meaning
set forth in Section 3.
PARTNERSHIP. "PARTNERSHIP" shall have the meaning set forth in the
Recitals of this Agreement.
PARTNERSHIP AGREEMENT. "PARTNERSHIP AGREEMENT" shall mean the Limited
Partnership Agreement of APMT Limited Partnership, dated as of the date hereof,
by and between the Trust and Starwood Mezzanine.
2
<PAGE>
REGISTER, REGISTERED AND REGISTRATION. "REGISTER", "REGISTERED", AND
"REGISTRATION" shall refer to a registration effected by preparing and filing
a registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering by the Commission of effectiveness of such
registration statement or document.
REGISTRABLE SECURITIES. "REGISTRABLE SECURITIES" shall mean: (i) the
Trust Shares issued upon exercise of the Class A Warrant, (ii) the Trust Shares
issued or to be issued upon exchange of Units issued on the Closing Date
pursuant to the Exchange Rights Agreement, (iii) any Trust Shares or other
securities issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange by the Trust generally for, or in
replacement by the Trust generally of, such Trust Shares; and (v) any securities
issued in exchange for such Trust Shares in any merger or reorganization of the
Trust; provided, however, that Registrable Securities shall not include any
securities which have theretofore been registered and sold pursuant to the
Securities Act or which have been sold to the public pursuant to Rule 144 or any
similar rule promulgated by the Commission pursuant to the Securities Act; and,
provided further, that the Trust shall have no obligation under Sections 2 and 3
to register any Registrable Securities if the Trust shall deliver to Starwood
Mezzanine an opinion of counsel to the effect that the proposed sale or
disposition of all of the Registrable Securities for which registration was
requested does not require registration under the Securities Act for a sale or
disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities. Notwithstanding anything to the contrary set forth herein,
Registrable Securities shall not include (x) any Units or (y) any Trust Shares
issued upon exchange of Units issued after the date hereof to any Person
(including, without limitation, Starwood Mezzanine).
REGISTRABLE SECURITIES THEN OUTSTANDING. "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall mean, with respect to a specified determination date, the
Registrable Securities owned by Starwood Mezzanine on such date and the
Registrable Securities which are issuable upon exchange of Units issued on the
Closing Date and owned by Starwood Mezzanine on such date.
REGISTRATION EXPENSES. "REGISTRATION EXPENSES" shall have the meaning set
forth in Section 6.1.
REIT REQUIREMENTS. "REIT REQUIREMENTS" shall mean the requirements for
the Trust to (i) qualify as a REIT under the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations promulgated thereunder,
and (ii) avoid any federal income or excise tax liability. "REIT Requirements"
shall also include the ownership limitation provisions set forth in Section 6.13
of the Declaration of Trust.
SECURITIES ACT. "SECURITIES ACT" shall mean the Securities Act of 1933 and
the rules and regulations of the Commission thereunder, all as the same may be
in effect at the time.
SHELF REGISTRATION. "SHELF REGISTRATION" shall have the meaning set forth
in Section 2.2.
TRANSFER. "TRANSFER" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging,
3
<PAGE>
hypothecating or otherwise transferring as security) (and correlative words
shall have correlative meanings); provided however, that any transfer or other
disposition upon foreclosure or other exercise of remedies of a secured creditor
after an event of default under or with respect to a pledge, hypothecation or
other transfer as security shall constitute a "Transfer".
TRUST SHARES. "TRUST SHARES" shall mean the Class A Shares, par value
$1.00 per share, of the Trust.
UNDERWRITERS' REPRESENTATIVE. "UNDERWRITERS' REPRESENTATIVE" shall mean
the managing underwriter, or, in the case of a co-managed underwriting, the
managing underwriter designated as the Underwriters' Representative by the co-
managers.
UNITS. "UNITS" shall have the meaning set forth in the Partnership
Agreement.
VIOLATION. "VIOLATION" shall have the meaning set forth in Section 7.1.
1.2 USAGE.
(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by Starwood
Mezzanine shall include Registrable Securities beneficially owned by Starwood
but which are held of record in the name of a nominee, trustee, custodian, or
other agent.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable both
to the singular and plural forms and the feminine, masculine and neuter forms
of the terms defined.
(vi) The term "including" and correlative terms shall be deemed to
be followed by "without limitation" whether or not followed by such words or
words of like import.
(vii) The term "hereof" and similar terms refer to this Agreement
as a whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 12.
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SECTION 2. DEMAND, SHELF AND TENDER REGISTRATIONS.
2.1 If Starwood Mezzanine shall make a written request to the Trust,
then the Trust shall cause there to be filed with the Commission a registration
statement under the Securities Act (a "Demand Registration") and (subject to
Section 2.9) the Trust shall include therein all or any portion of the
Registrable Securities as Starwood shall request in such written request. Any
request made pursuant to this Section 2.1 shall be addressed to the attention of
the Secretary of the Trust, and shall specify the number of Registrable
Securities to be registered, the intended methods of disposition thereof and
that the request is for a Demand Registration pursuant to this Section 2.1.
2.2 If Starwood Mezzanine shall make a written request to the Trust,
then the Trust shall cause there to be filed with the Commission a registration
statement in accordance with the Securities Act for an offering on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (a "Shelf
Registration"), and the Trust shall include therein the Registrable Securities
requested by Starwood Mezzanine. Any request made pursuant to this Section 2.2
shall be addressed to the attention of the Secretary of the Trust, and shall
specify the number of Registrable Securities to be registered, the possible
intended methods of disposition thereof and that the request is for a Shelf
Registration pursuant to this Section 2.2.
2.3 Notwithstanding the foregoing, no request may be made pursuant to
Section 2.1 or 2.2 (i) if within ninety (90) days prior to the date of such
request a registration statement pursuant to this Section 2.1 or 2.2 shall have
been declared effective by the Commission or (ii) during the ninety (90) day
period after Starwood Mezzanine has requested a registration pursuant to Section
2 hereof and such request has not been withdrawn.
2.4 (i) The Trust shall be entitled to postpone or suspend for up to
ninety (90) days the filing, effectiveness, supplementing or amending of any
registration statement otherwise required to be prepared and filed pursuant to
this Section 2, if the Board of Trustees of the Trust determines that such
registration and the Transfer of Registrable Securities contemplated thereby
would interfere with, or require premature disclosure of, any material
financing, acquisition, disposition, reorganization or other transaction
involving the Partnership, the Trust or any of their respective subsidiaries
(the "Transaction") and the Trust promptly gives Starwood Mezzanine notice of
such determination. Starwood Mezzanine hereby acknowledges that any notice given
by the Trust pursuant to this Section 2.4(i) shall constitute material non-
public information and that the United States securities laws prohibit any
Person who has material non-public information about a company from purchasing
or selling securities of such company or from communicating such information to
any other Person under circumstances in which it is reasonably foreseeable that
such Person is likely to purchase or sell such securities. Upon receipt of such
notice, Starwood Mezzanine agrees to cease making offers or Transfers of
Registrable Securities pursuant to such registration statement. In the event the
Trust shall give any such notice, the time period set forth in Section 2.5(ii)
shall be extended for a period equal to the number of days from the date of such
notice until the date the Board of Trustees of the Trust determine that the
making of offers or Transfers of Registrable Securities shall not interfere with
the Transaction.
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(ii) The Trust shall not be obligated to file any registration
statement pursuant to this Section 2 if, within thirty (30) days after their
receipt of the written request of Starwood Mezzanine, the Trust notifies
Starwood Mezzanine that, prior to their receipt of such request, they had a plan
or intention promptly to register equity securities under the Securities Act.
Starwood Mezzanine shall have the right to participate in any such registration
on the terms provided in Section 3 hereof.
(iii) Notwithstanding anything to the contrary contained in this
Agreement, without the consent of the Independent Trustees, no Registrable
Securities may be offered or sold pursuant to a registration statement pursuant
to Sections 2 or 3 prior to the earlier of (i) one (1) year from the date of
this Agreement or (ii) the exercise of the Class A Warrant for at least
2,000,000 Trust Shares by Starwood Mezzanine. Starwood Mezzanine shall not be
entitled to participate in any Piggyback Registration pursuant to which
securities registered thereunder are to be offered or sold prior to the earlier
of one (1) year from the date of this Agreement.
2.5 Following receipt of a request for a Demand Registration or a Shelf
Registration, the Trust shall:
(i) File the registration statement with the Commission as
promptly as practicable, and shall use reasonable efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use reasonable efforts to keep the relevant registration
statement Continuously Effective (x) if a Demand Registration, until (A) 45 days
from the date on which the Demand Registration becomes effective under the
Securities Act or (B) such earlier date as of which all the Registrable
Securities under the Demand Registration statement shall have been disposed of
in the manner described in the registration statement and (y) if a Shelf
Registration, until (A) 365 days from the date on which the Shelf Registration
becomes effective under the Securities Act or (B) such date as of which all the
Registrable Securities under the Shelf Registration statement have been disposed
of in a manner described in the registration statement.
(iii) If any Demand Registration statement was not maintained
Continuously Effective (other than pursuant to Section 2.4) for a period of at
least 45 days or such shorter period at the end of which all Registrable
Securities covered by such Demand Registration have been sold pursuant thereto,
Starwood shall be entitled to an additional Demand Registration; provided the
Trust shall only be obligated to maintain effective such additional Demand
Registration for a period equal to 45 days less the number of days the initial
Demand Registration was effective. If the Shelf Registration is suspended or
terminated and not Continuously Effective for a period of at least 365 days or
such shorter period at the end of which all Registrable Securities covered by
such Shelf Registration have been sold pursuant thereto (other than pursuant to
Section 2.4), the Trust shall at the request of Starwood file an additional
"shelf" registration statement and keep such subsequent shelf registration
statement Continuously Effective for a period equal to 365 days less the number
of days during which the Shelf Registration Statement was effective.
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2.6 Notwithstanding anything in this Agreement to the contrary, (i)
subject to Section 2.5(iii), in no event will the Trust be obligated to effect
more than a total of 1 Demand Registration and 1 Shelf Registration, (ii) in no
event will the Trust be obligated to effect any Demand Registration or Shelf
Registration for less than Two Hundred Fifty Thousand (250,000) Trust Shares,
(iii) in no event will the Trust be obligated to effect a Demand Registration if
the Registrable Securities proposed to be registered therein shall be covered by
a Shelf Registration statement, and (iv) no registration shall be effected under
this Agreement and no Transfer of Registrable Securities may be effected if as a
result thereof the Trust would not satisfy the REIT Requirements in any respect
or if such registration or Transfer would result in any Person Beneficially
Owning Trust Shares in excess of the ownership limitation provisions of the REIT
Requirements. For purposes of the preceding sentence, registration shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective, or (ii) if after such registration statement has
become effective, the related offer, sale or distribution of Registrable
Securities thereunder is prohibited by any stop order, injunction or other order
or requirement of the Commission or other governmental agency or court for any
reason not attributable to Starwood and such prohibition is not thereafter
eliminated. If the Trust shall have complied with its obligations under this
Agreement, a right to demand a registration pursuant to this Section 2 shall be
deemed to have been satisfied (i) if a Demand Registration, upon the earlier of
(A) the date as of which all of the Registrable Securities included therein
shall have been disposed of pursuant to the Registration Statement, and (B) the
date as of which such Demand Registration shall have been Continuously Effective
for a period of forty-five (45) days, and (ii) if a Shelf Registration, upon the
earlier of (A) the date as of which all the Registrable Securities included
therein shall have been disposed of pursuant to the Registration Statement, and
(B) the date of which such Shelf Registration has been Continuously Effective
for a period of 365 days, provided (x) no stop order or similar order, or
proceedings for such an order, is thereafter entered or initiated and, (y) if
the Trust, is subject to and complies with the provisions of Sections 2.4(i) and
2.5(iii) a right to demand registration shall be deemed to have been satisfied.
2.7 A registration pursuant to this Section 2 shall be on such
appropriate registration form of the Commission as shall be selected by the
Trust and shall permit the disposition of the Registrable Securities in
accordance with the intended method or methods of disposition specified in the
request pursuant to Sections 2.1 or 2.2, respectively.
2.8 If any Demand Registration or Shelf Registration pursuant to
Section 2 involves an underwritten offering (whether on a "firm commitment",
"best efforts" or "all reasonable efforts" basis or otherwise), Starwood
Mezzanine shall select the underwriter or underwriters and manager or managers
to administer such underwritten offering; provided, however, that each Person so
selected shall be acceptable to the Trust.
2.9 Whenever the Trust shall effect a registration pursuant to this
Section 2 in connection with an underwritten offering pursuant to Section 2.8
and the Underwriters' Representative advises the Trust and Starwood Mezzanine
that, in its opinion, the amount of securities requested to be included in such
offering (whether by Starwood Mezzanine or others, including the Trust) exceeds
the amount which can be sold in such offering within a price range acceptable to
Starwood Mezzanine, securities shall be included in such offering and the
related registration, to the extent of the amount which can be sold within such
price range in the
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following order of priority: first, the Registrable Securities of Starwood
Mezzanine requested to be included in such registration pursuant to this Section
2; second, all securities to be offered by the Trust and; third, all other
securities requested to be included in such registration.
SECTION 3. PIGGYBACK REGISTRATION.
3.1 If at any time the Trust proposes to register Trust Shares under
the Securities Act in connection with the public offering solely for cash on
Form S-1, S-2, S-3, or S-11 (or any replacement or successor forms), the Trust
shall promptly give Starwood Mezzanine written notice of such registration. Upon
the written request of Starwood Mezzanine given as promptly as practicable but
in any event within twenty (20) days following the date of such notice, the
Trust shall cause to be included in such registration statement and use
reasonable efforts to be registered under the Securities Act all the Registrable
Securities that Starwood Mezzanine shall have requested to be registered; (any
such registration in which Starwood Mezzanine participates pursuant to this
Section 3.1 being referred to as a "Piggyback Registration"). The Trust shall
have the absolute right to delay, withdraw or cease to prepare or file any
registration statement for any offering referred to in this Section 3 without
any obligation or liability to Starwood Mezzanine, it being understood that any
Registrable Securities previously included in any such withdrawn Registration
Statement shall not cease to be Registrable Securities by reason of such
inclusion or withdrawal.
3.2 If the Underwriters' Representative shall advise the Trust that, in
its opinion, the amount or type of Registrable Securities requested to be
included in such registration would adversely affect such offering, or the
timing thereof, then the Trust will include in such registration, to the extent
of the amount and class which the Trust is so advised can be sold without such
adverse effect in such offering: first, all securities proposed to be sold by
the Trust for its own account; second, the Registrable Securities requested to
be included in such registration by Starwood Mezzanine pursuant to this Section
3; and third, all other securities requested to be included in such
registration.
SECTION 4. REGISTRATION PROCEDURES. Whenever required under Section 2 or
Section 3 to effect the registration of any Registrable Securities, the Trust
shall, as expeditiously as practicable:
4.1 Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use reasonable efforts to cause such
registration statement to become effective; provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Trust shall furnish to counsel for Starwood Mezzanine, copies of
all such documents in the form substantially as proposed to be filed with the
Commission.
4.2 Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act and rules thereunder with respect to the disposition of all
securities covered by such registration statement. If the registration is for an
underwritten offering, the Trust shall amend the registration statement or
supplement the prospectus whenever required by the terms of the underwriting
agreement entered
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into pursuant to Section 5.2. If the registration statement is for a Shelf
Registration, the Trust shall amend the registration statement or supplement the
prospectus so that it will remain current and in compliance with the
requirements of the Securities Act for the period specified in Section 2.5(ii),
and if during such period any event or development occurs as a result of which
the registration statement or prospectus contains a misstatement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, the Trust shall
promptly notify Starwood Mezzanine, amend the registration statement or
supplement the prospectus so that each will thereafter comply with the
Securities Act and furnish to Starwood Mezzanine such amended or supplemented
prospectus, which each such Holder shall thereafter use in the Transfer of
Registrable Securities covered by such registration statement. Pending any such
amendment or supplement described in this Section 4.2, Starwood Mezzanine shall
cease making offers or Transfers of Registrable Securities pursuant to the prior
prospectus. In the event that any Registrable Securities included in a
registration statement subject to, or required by, this Agreement remain unsold
at the end of the period during which the Trust is obligated to use reasonable
efforts to maintain the effectiveness of such registration statement, the Trust
may file a post-effective amendment to the registration statement for the
purpose of removing such Registrable Securities from registered status.
4.3 Furnish to Starwood Mezzanine, without charge, such numbers of
copies of the registration statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary prospectus and any
amendments or supplements thereto, in each case in conformity with the
requirements of the Securities Act and the rules thereunder, and such other
related documents as Starwood Mezzanine may reasonably request in order to
facilitate the disposition of Registrable Securities.
4.4 Use reasonable efforts (i) to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such states where an exemption from registration is not available and as
shall be reasonably requested by the Underwriters' Representative and (ii) to
obtain the withdrawal of any order suspending the effectiveness of a
registration statement; or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and transfer of any of the
Registrable Securities in any state, at the earliest possible moment; provided,
however, that the Trust shall not be required in connection therewith or as a
condition thereto to qualify to do business or to consent to general service of
process in any state.
4.5 In the event of any underwritten offering, use reasonable efforts to
enter into and perform its obligations under an underwriting agreement
(including indemnification and contribution obligations of underwriters), in
usual and customary form, with the managing underwriter or underwriters of such
offering. The Trust shall also cooperate with Starwood Mezzanine, and the
Underwriters' Representative for such offering in the marketing of the
Registrable Securities, including making available the officers, accountants,
counsel, premises, books and records of the Trust for such purpose, but the
Trust shall not be required to incur any material out-of-pocket expense pursuant
to this sentence.
4.6 Promptly notify Starwood Mezzanine of any stop order issued or
threatened to be issued by the Commission in connection therewith and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
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4.7 Make available for inspection by Starwood Mezzanine, any underwriter
participating in such offering and the representatives of Starwood Mezzanine and
Underwriter (but not more than one firm of counsel to Starwood Mezzanine), all
financial and other information as shall be reasonably requested by them, and
provide Starwood Mezzanine, any underwriter participating in such offering and
the representatives of Starwood Mezzanine and Underwriter the reasonable
opportunity to discuss the business affairs of the Trust with their principal
executives and independent public accountants who have certified the audited
financial statements included in such registration statement, in each case all
as necessary to enable them to exercise their due diligence responsibility under
the Securities Act; provided, however, that information that the Trust
determines to be confidential and which the Trust advises such Person in
writing, is confidential shall not be disclosed unless such Person signs a
confidentiality agreement reasonably satisfactory to the Trust or Starwood
Mezzanine agrees to be responsible for such Person's breach of confidentiality
on terms reasonably satisfactory to the Trust.
4.8 Use reasonable efforts to obtain a so-called "comfort letter" from
the independent public accountants of the Trust, and legal opinions of counsel
to the Trust addressed to Starwood Mezzanine, in customary form and covering
such matters of the type customarily covered by such letters, and in a form that
shall be reasonably satisfactory to Starwood Mezzanine. Delivery of any such
opinion or comfort letter shall be subject to the recipient furnishing such
written representations or acknowledgements as are customarily provided by
selling shareholders who receive such comfort letters or opinions.
4.9 Use reasonable efforts to cause the Registrable Securities covered
by such registration statement (i) if the Trust Shares are then listed on a
securities exchange or included for quotation in a recognized trading market, to
continue to be so listed or included for a reasonable period of time after the
offering, and (ii) to be registered with or approved by such other United States
or state governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Trust to enable Starwood Mezzanine to
consummate the disposition of such Registrable Securities.
4.10 Take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities included in
each such registration.
SECTION 5. STARWOOD MEZZANINE'S OBLIGATIONS. It shall be a condition
precedent to the obligations of the Trust to take any action pursuant to this
Agreement with respect to the Registrable Securities of Starwood Mezzanine that
Starwood Mezzanine shall:
5.1 Furnish to the Trust such information regarding Starwood Mezzanine,
the number of the Registrable Securities owned by it, and the intended method of
disposition of such securities as shall be required to effect the registration
of Registrable Securities of Starwood Mezzanine, and to cooperate fully with the
Trust in preparing such registration.
5.2 In the case of a registration under Section 3, agree to sell its
Registrable Securities to the underwriters at the same price and on
substantially the same terms and conditions as the Trust or the other Persons on
whose behalf the registration statement was being filed have agreed to sell
their securities, and, to execute the underwriting agreement agreed to by the
Trust and such other persons.
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SECTION 6. EXPENSES OF REGISTRATION. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1 With respect to each Demand Registration and Shelf Registration, the
Trust shall bear and pay all expenses incurred in connection with any
registration, filing, or qualification of Registrable Securities with respect to
such registration for Starwood Mezzanine, including all registration, filing and
National Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or blue sky laws, all printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of counsel for the
Trust and of the independent public accountants for the Trust, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance (the "Registration Expenses"), but excluding underwriting
discounts and commissions relating to Registrable Securities and all fees and
expenses of counsel for Starwood Mezzanine; provided, however, that the Trust
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2 if the registration is subsequently withdrawn (in
which case all holders of securities participating in such registration shall
bear such expenses, pro rata), unless, in the case of a Demand Registration or a
Shelf Registration, Starwood Mezzanine agrees that such withdrawn registration
shall have constituted one of the Demand and Shelf Registrations available to
them under Section 2 hereof.
6.2 The Trust shall bear and pay all Registration Expenses incurred in
connection with any Piggyback Registrations pursuant to Section 3 but excluding
underwriting discounts and commissions relating to Registrable Securities and
all fees and expenses of counsel for Starwood Mezzanine.
SECTION 7. INDEMNIFICATION; CONTRIBUTION. If any Registrable Securities
are included in a registration statement under this Agreement:
7.1 To the extent permitted by applicable law, the Trust shall indemnify
and hold harmless Starwood Mezzanine, each Person, if any, who controls Starwood
Mezzanine within the meaning of the Securities Act, and each officer, director,
partner and employee of Starwood Mezzanine and such controlling Person, against
any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorneys' fees and disbursements and reasonable
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"):
(i) Any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto; or
(ii) The omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading; provided, however, that the indemnification required by this
Section 7.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is effected
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without the consent of the Trust (which consent shall not be unreasonably
withheld), nor shall the Trust be liable in any such case for any such loss,
claim, damage, liability or expense to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished to the Trust by the indemnified party expressly for use in
connection with such registration; and provided, further, that the indemnity
agreement contained in this Section 7 shall not apply to the extent that any
such loss is based on or arises out of an untrue statement or alleged untrue
statement of a material fact, or an omission or alleged omission to state a
material fact, contained in or omitted from any preliminary prospectus if the
final prospectus shall correct such untrue statement or alleged untrue
statement, or such omission or alleged omission, and a copy of the final
prospectus has not been sent or given to such person at or prior to the
confirmation of sale to such person if an underwriter was under an obligation to
deliver such final prospectus and failed to do so.
7.2 To the extent permitted by applicable law, Starwood Mezzanine shall
indemnify and hold harmless the Trust, its Trustees, officers, employees and
agents, each Person, if any, who controls the Trust within the meaning of the
Securities Act, and the trustees, directors, officers, employees or agents of
such controlling Person against any and all losses, claims, damages, liabilities
and expenses (joint and several), including reasonable attorneys' fees and
disbursements and reasonable expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws, but only
insofar as such losses, claims, damages, liabilities and expenses arise out of
or are based upon any Violation, in each case to the extent that such Violation
arises out of or is based upon information furnished by Starwood Mezzanine
expressly for use in connection with such registration; provided, however, that
(x) the indemnification required by this Section 7.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of Starwood Mezzanine (which consent
shall not be unreasonably withheld) and (y) in no event shall the amount of any
indemnity under this Section 7.2 exceed the gross proceeds from the applicable
offering received by Starwood Mezzanine.
7.3 Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit, proceeding, investigation or
threat thereof made in writing for which such indemnified party may make a claim
under this Section 7, such indemnified party shall deliver to the indemnifying
party a written notice thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and disbursements and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 7 to the extent of such prejudice but shall not relieve the indemnifying
party of any liability that it may have to any indemnified party otherwise than
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pursuant to this Section 7. Any fees and expenses incurred by the indemnified
party (including any fees and expenses incurred in connection with investigating
or preparing to defend such action or proceeding) shall be paid to the
indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel in writing that there
may be one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party and that the assertion of
such defenses would create a conflict of interest such that counsel employed by
the indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels).
7.4 If the indemnification required by this Section 7 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 7:
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.1 and Section 7.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
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(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
7.5 If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
this Section 7 without regard to the relative fault of such indemnifying party
or indemnified party or any other equitable consideration referred to in Section
7.4.
7.6 The obligations of the Trust and Starwood Mezzanine under this Section
7 shall survive the completion of any offering of Registrable Securities
pursuant to a registration statement under this Agreement, and otherwise.
SECTION 8. DETERMINATIONS AND INTERPRETATION. All determinations of the
Trust (or the Board of Trustees of the Trust) provided for in or pursuant to
this Agreement shall be made by its Independent Trustees, including, without
limitation, any determination pursuant to Sections 2.4(i) and 2.7. All
interpretations of the terms of this Agreement shall be resolved on behalf of
the Trust by its Independent Trustees.
SECTION 9. HOLDBACK. (a) Starwood Mezzanine, if so requested by the
Underwriters' Representative in connection with an offering of any securities
covered by a registration statement filed by Trust, whether or not Starwood
Mezzanine's securities are included therein, shall not effect any public sale or
distribution of Trust Shares or any securities convertible into or exchangeable
or exercisable for Trust Shares, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration), during the
fifteen (15)-day period prior to, and during the one hundred twenty (120)-day
period beginning on, the date such registration statement is declared effective
under the Securities Act by the Commission. In order to enforce the foregoing
covenant, the Trust shall be entitled to impose stop-transfer instructions with
respect to the Registrable Securities of Starwood Mezzanine until the end of
such period. Starwood Mezzanine shall have the right to participate in any such
registration on the terms provided herein.
(b) The Trust agrees not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the fifteen (15)-day period prior to and
during the ninety (90)-day period beginning on the effective date of any
underwritten Demand Registration (except pursuant to (i) registrations on Form
S-8 or any successor form, (ii) registrations on Form S-4 or any successor form
and (iii) registrations of securities in connection with a dividend reinvestment
plan (on form(s) applicable to such securities) unless the underwriters managing
the registered public offering otherwise agree.
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SECTION 10. AMENDMENT, MODIFICATION AND WAIVERS; FURTHER ASSURANCES.
(i) This Agreement may be amended with the consent of the Trust and
the Trust may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Trust shall have obtained the
written consent of Starwood Mezzanine to such amendment, action or omission to
act.
(ii) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
SECTION 11. ASSIGNMENT; BENEFIT. This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated (i) by
the Trust without the consent of Starwood Mezzanine (which consent shall not be
unreasonably withheld) or (ii) by Starwood Mezzanine unless the transferee of
the Registrable Securities is a direct or indirect partner of Starwood
Mezzanine.
SECTION 12. MISCELLANEOUS.
12.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving regard to
the conflict of laws principles thereof.
12.2 NOTICES. All notices and requests given pursuant to this Agreement
shall be in writing and shall be made by hand-delivery, first-class mail
(registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified in the Formation Agreement. Except as otherwise provided in
this Agreement, the date of each such notice and request shall be deemed to be,
and the date on which each such notice and request shall be deemed given shall
be: at the time delivered, if personally delivered or mailed; when receipt is
acknowledged, if sent by facsimile; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next
business day delivery.
12.3 ENTIRE AGREEMENT; INTEGRATION. This Agreement supersedes all prior
agreements between or among any of the parties hereto with respect to the
subject matter contained herein
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and therein, and such agreements embody the entire understanding among the
parties relating to such subject matter.
12.4 SECTION HEADINGS. Section headings are for convenience of reference
only and shall not affect the meaning of any provision of this Agreement.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
12.6 SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
and enforceability of the remaining provisions of this Agreement, unless the
result thereof would be unreasonable, in which case the parties hereto shall
negotiate in good faith as to appropriate amendments hereto.
12.7 TERMINATION. This Agreement may be terminated at any time by a
written instrument signed by the Trust and Starwood Mezzanine. Unless sooner
terminated in accordance with the preceding sentence, this Agreement (other than
Section 7 hereof) shall terminate in its entirety on such date as there shall be
(a) no Registrable Securities outstanding, and (b) no securities outstanding
which are convertible or exchangeable into Registrable Securities; provided that
any Trust Shares previously subject to this Agreement shall not be Registrable
Securities following the sale of any such shares in an offering registered
pursuant to this Agreement.
12.8 ANGELES PARTICIPATING MORTGAGE TRUST. The parties hereto
understand and agree that the name "Angeles Participating Mortgage Trust" is a
designation of the Trust and its Trustees (as Trustees but not personally) under
the Declaration of Trust, and all persons dealing with the Trust shall look
solely to the Trust's assets for the enforcement of any claims against the
Trust, and that the Trustees, officers, agents and security holders of the Trust
assume no personal liability for obligations entered into on behalf of the
Trust, and their respective individual assets shall not be subject to the claims
of any person relating to such obligations.
12.9 OTHER REGISTRATION RIGHTS. The Trust will not grant directly or
indirectly to any Persons the right to request the Trust to register any equity
securities of the Trust, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of Starwood
Mezzanine (which consent shall not be unreasonably withheld). The Trust hereby
severally represents and warrants that it has not previously entered into any
agreement with respect to the Trust Shares granting any registration rights to
any Person.
12.10 SUBMISSION TO JURISDICTION. Each of the parties hereto and each
of the Holders irrevocably submits and consents to the jurisdiction of the
United States District Court for the Central District of California in
connection with any action or proceeding arising out of or relating to this
Agreement, and irrevocably waives any immunity from jurisdiction thereof and
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any claim of improper venue, forum non conveniens or any similar basis to which
it might otherwise be entitled in any such action or proceeding.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first written above.
ANGELES PARTICIPATING MORTGAGE TRUST,
a California business trust
By:
------------------------------------------
Name:
Title:
STARWOOD MEZZANINE INVESTORS, L.P.
By: STARWOOD CAPITAL GROUP, L.P.,
a Delaware limited partnership,
General Partner
By: BSS CAPITAL PARTNERS, L.P.,
a Delaware limited partnership,
General Partner
By: STERNLICHT HOLDINGS II, INC.,
a Delaware corporation,
General Partner
By:
------------------------------
Name:
Title:
17
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EXHIBIT 99.9
FORMATION AGREEMENT
THIS FORMATION AGREEMENT (this "Agreement") is made and entered into this
26th day of September, 1996, by and between ANGELES PARTICIPATING MORTGAGE
TRUST, a California business trust, organized under the laws of the State of
California ("APT"), and STARWOOD MEZZANINE INVESTORS, L.P., a Delaware limited
partnership ("Starwood Mezzanine"). Unless otherwise indicated, certain terms
used herein are used as defined in Section 9.4 hereof.
W I T N E S S E T H:
-------------------
WHEREAS, APT is a California business trust, having 2,550,000 Class A
Shares, par value $1.00 per share ("Class A Shares"), issued and outstanding,
and having 1,275,000 Class B Shares, par value $0.01 per share ("Class B
Shares"), issued and outstanding, in each case as of the date hereof;
WHEREAS, APT and Starwood Mezzanine desire to, among other things, provide
for the formation, capitalization and operation of a limited partnership (the
"Partnership") under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware RULPA") on the terms and conditions set forth herein;
WHEREAS, the general partner of Starwood Mezzanine and the requisite number
of limited partners have approved the transactions provided for in this
Agreement and the Board of Trustees of APT has approved the transactions
provided for in this Agreement and has directed that the transactions
contemplated by this Agreement be submitted for adoption to the shareholders of
APT; and
WHEREAS, APT and Starwood Mezzanine desire to make certain representations,
warranties and agreements in connection with the transactions contemplated by
this Agreement and also to prescribe various conditions to the consummation of
such transactions.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
FORMATION AND CLOSING
Section 1.1 Formation. Upon the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.2) (a) APT
and Starwood Mezzanine shall form the Partnership by executing and delivering
the Limited Partnership Agreement of the Partnership in substantially the form
attached to this Agreement as Exhibit A (the "Partnership Agreement") and by
executing and filing in the Office of the Secretary of State of the State of
<PAGE>
Delaware a certificate of limited partnership of the Partnership, (b) in
exchange for a limited partnership interest in the Partnership representing a
92.24% Partnership Interest (as defined in the Partnership Agreement), subject
to adjustment, Starwood Mezzanine shall contribute to the Partnership the entire
interest of Starwood Mezzanine in the Certificates (as defined in Section 3.5),
valued at approximately $4,757,000 as of January 1, 1996, (c) in exchange for a
general partnership interest in the Partnership representing a 7.76% Partnership
Interest, subject to adjustment, APT shall contribute $400,000, in cash, plus or
minus prorations, if any, to the Partnership, and (d) APT and Starwood Mezzanine
shall take or cause to be taken all other actions contemplated herein to be
taken on the Closing Date.
Section 1.2 Closing Date. Upon the terms and subject to the conditions set
forth in this Agreement, the transactions contemplated by this Agreement shall
be consummated (the "Closing") at 10:00 a.m., local time, on the next business
day after the meetings of the shareholders of APT provided for in Section 4.2,
or such other date as may be agreed upon by APT and Starwood Mezzanine, at the
offices of Katten Muchin & Zavis, 1999 Avenue of the Stars, Suite 1400, Los
Angeles, California 90067-6042, or at such other place or at such other time as
shall be agreed upon by APT and Starwood Mezzanine (such date and time being
herein called the "Closing Date").
Section 1.3 Closing Date Deliveries. On the Closing Date, APT and Starwood
Mezzanine, as appropriate, shall execute and deliver or cause the Partnership to
execute and deliver the following documents: (a) the Partnership Agreement, (b)
the Exchange Rights Agreement between APT and Starwood Mezzanine in
substantially the form attached to this Agreement as Exhibit B (the "Exchange
Agreement"), (c) the Registration Rights Agreement between APT and Starwood
Mezzanine in substantially the form attached to this Agreement as Exhibit C (the
"Registration Rights Agreement"), (d) the Assignment and Assumption Agreement
between the Partnership and Starwood Mezzanine in substantially the form
attached to this Agreement as Exhibit D, (e) all of the documents, instruments
and opinions required to be delivered pursuant to Articles V and VI hereof, and
(f) all the other documents, instruments and agreements (including instruments
of transfer) reasonably necessary to carry out the terms and provisions of this
Agreement and each of the other documents referred to in this Section 1.3. The
documents described in clauses (a), (b), (c) and (d) above shall hereinafter be
referred to as the Transaction Agreements.
Section 1.4 Closing Adjustments. Interest which has accrued but not yet
been paid on the Certificates prior to or on the Closing Date shall be paid to
Starwood Mezzanine by the Partnership within 1 day of the date such interest is
paid to the Partnership. All interest accruing on the Certificates subsequent to
the Closing Date shall be payable to the Partnership. If the principal amount of
the Certificates has been reduced subsequent to January 1, 1996, Starwood
Mezzanine's Partnership Interest will be reduced accordingly and APT's
Partnership Interest will be increased accordingly.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF APT
As an inducement to Starwood Mezzanine to enter into this Agreement and to
consummate the transactions contemplated hereby, APT represents and warrants to
Starwood Mezzanine and agrees as follows:
Section 2.1 Organization of APT. APT is a real estate investment trust duly
organized and validly existing under the laws of the State of California. APT is
duly qualified to transact business in each of the jurisdictions in which the
ownership or leasing of the properties used in its business or the conduct of
its business requires such qualification, other than in such jurisdictions where
the failure to be so qualified would not have a Material Adverse Effect on APT
or, to the knowledge of APT, after the Closing, on the Partnership. APT has all
requisite trust power and authority to own or lease and operate its properties
and to carry on its business as now conducted.
Section 2.2 No Subsidiaries. APT has no subsidiaries of any kind
whatsoever.
Section 2.3 Capitalization. On the date hereof, (i) 2,550,000 Class A
Shares are validly issued and outstanding and are fully paid and nonassessable,
and (ii) 1,275,000 Class B Shares are validly issued and outstanding and are
fully paid and nonassessable. All shares subject to issuance pursuant to the
Class A Warrant and Class B Warrant, upon issuance on the terms and conditions
specified in the instrument pursuant to which such shares are issuable, shall be
duly authorized, validly issued, fully paid and non-assessable. APT has
delivered to Starwood Mezzanine complete and correct copies of the Class A
Warrant and Class B Warrant. Except for the Warrants, and except as contemplated
by the Transaction Agreements and the Trust Declaration, there are no options,
warrants or other rights to acquire, or agreements or commitments pursuant to
which APT is obligated to issue, sell, purchase or redeem, shares of capital
stock of APT. The Class A Shares are currently publicly traded on the American
Stock Exchange ("AMEX") and will remain so at Closing.
Section 2.4 Authority.
(a) APT has full trust power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by APT and, subject to the
approval by the shareholders of APT of the APT Shareholder Matters (as defined
in Section 4.2), to consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by APT of this Agreement,
the Transaction Agreements and the other agreements and instruments contemplated
hereby and thereby and the consummation by APT of the transactions contemplated
hereby and thereby have been duly authorized by all necessary trust action on
the part of APT, subject to the approval by the shareholders of APT of the APT
Shareholder Matters. This Agreement is, and each other agreement or instrument
contemplated hereby (including, without limitation, the Transaction
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Agreements) to be executed by APT, when executed and delivered by APT, will be,
the legal, valid and binding agreement of APT, enforceable against APT in
accordance with their respective terms.
(c) Neither the execution or delivery by APT of this Agreement, the
Transaction Agreements or the other agreements and instruments contemplated
hereby or thereby, nor consummation of the transactions contemplated hereby or
thereby or compliance with or fulfillment of the terms and provisions hereof or
thereof by APT, will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the assets of APT, under any organizational document of APT or any other
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which APT is a party or any of its properties is subject or by which it is
bound or any statute, other law or regulatory provision affecting it, (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of APT, or (iii) adversely affect the ability of APT to continue to
qualify to be taxed as a "real estate investment trust", as defined in Section
856 of the Code ("REIT"), for the taxable year ending December 31, 1996, other
than as described in the Proxy Statement (as hereinafter defined), except for
(A) the filing of appropriate documents with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (B) approval by the shareholders of APT of the APT
Shareholder Matters, and (C) such conflicts, breaches, defaults, events,
creations, impositions, approvals, consents, declarations, filings or
authorizations which would not reasonably be expected to either (x) have a
Material Adverse Effect on APT or, in addition, to the knowledge of APT, after
the Closing, on the Partnership or (y) prevent or hinder the consummation of the
transactions contemplated hereby.
Section 2.5 Litigation. To the knowledge of APT, there are no actions,
suits or proceedings or court orders or decrees pending or threatened to which
APT is a party or any of its assets is subject or by which it is bound before or
by any court or governmental agency, which if determined adversely to the
interests of APT, would reasonably be expected to either (a) have a Material
Adverse Effect on APT or, after the Closing, to the knowledge of APT, on the
Partnership or (b) prevent or hinder the consummation of the transactions
contemplated hereby.
Section 2.6 Certain Matters.
(a) As of the date hereof, APT has no assets or properties other than
One Million Seven Hundred Eighty Five Thousand Dollars ($1,785,000) in cash and
cash equivalents or as otherwise disclosed in the SEC documents.
(b) APT will continue to qualify to be taxed as a REIT for the taxable
year ending December 31, 1996; provided that the Closing Date has occurred prior
to September 30, 1996.
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Section 2.7 SEC Documents. APT has previously delivered or made available
to Starwood Mezzanine complete and correct copies of all reports and statements
filed by APT with the SEC since December 31, 1993 (the "SEC Documents"). As of
their respective dates, none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Section 2.8 Shareholder Agreement. APT has delivered to Starwood Mezzanine
a true and complete copy of the Restated Shareholders Agreement, originally made
and entered into as of March 15, 1994, as restated as of April 27, 1994, and as
amended March 15, 1996. Said document is in full force and effect and no
defaults or breaches exist thereunder.
Section 2.9 Financial Information. The financial statements (excluding the
pro form financial data) included in the SEC documents present fairly the
financial condition, results of operation and changes in the financial condition
of APT at the dates and for the periods indicated and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as otherwise indicated therein).
The pro forma financial data included in the Proxy Statement (as defined in
Section 4.1) has been prepared in accordance with all applicable rules and
guidelines of the SEC with respect to pro forma financial data, and the
adjustments used therein are appropriate to give effect to the transaction or
circumstance referred to therein.
Section 2.10 No Finder. Neither APT nor any party acting on the behalf of
APT has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
As an inducement to APT to enter into this Agreement and to consummate the
transactions contemplated hereby, Starwood Mezzanine represents and warrants to
APT and agrees as follows:
Section 3.1 Organization of Starwood Mezzanine. Starwood Mezzanine is a
limited partnership duly formed, validly existing and in good standing as a
limited partnership under the Delaware RULPA. Starwood Mezzanine is duly
qualified to transact business and is in good standing in each of the
jurisdictions in which the ownership or leasing of the properties used in its
business or the conduct of its business requires such qualification, other than
in such jurisdictions where the failure to be so qualified and in good standing
would not have a Material Adverse Effect on Starwood Mezzanine or, to the
knowledge of Starwood Mezzanine, after the Closing, on the Partnership. Starwood
Mezzanine has all requisite partnership power and authority to carry on its
business as now conducted.
5
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Section 3.2 Authority.
(a) Starwood Mezzanine has full partnership power and authority to
enter into this Agreement, the Transaction Agreements and the other agreements
and instruments contemplated hereby and thereby to be entered into by it and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by Starwood Mezzanine of
this Agreement, the Transaction Agreements and the other agreements and
instruments contemplated hereby and thereby and the consummation by Starwood
Mezzanine of the transactions contemplated hereby and thereby have been duly
authorized by all necessary partnership action. This Agreement is, and each
other agreement or instrument contemplated hereby (including, without
limitation, the Transaction Agreements) of Starwood Mezzanine contemplated
hereby (including, without limitation, the Transaction Agreements), to be
executed by Starwood Mezzanine when executed and delivered by Starwood
Mezzanine, will be, the legal, valid and binding agreement of Starwood
Mezzanine, enforceable against Starwood Mezzanine in accordance with its
respective terms.
(c) Neither the execution and delivery by Starwood Mezzanine of this
Agreement, the Transaction Agreements or the other agreements and instruments
contemplated hereby and thereby, nor consummation of the transactions
contemplated hereby or thereby or compliance with or fulfillment of the terms
and provisions hereof or thereof by Starwood Mezzanine will (i) conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights, or result in the creation or
imposition of any encumbrance upon the Certificates (as hereinafter defined)
under the agreement of limited partnership of Starwood Mezzanine, any
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which Starwood Mezzanine is a party or the Certificates are subject or bound
or any statute, other law or regulatory provision affecting any of them, or (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of Starwood Mezzanine, except for conflicts, breaches, defaults,
events, creations, impositions, approvals, consents, declarations, filings or
authorizations which would not reasonably be expected to either (x) have a
Material Adverse Effect on Starwood Mezzanine or, to the knowledge of Starwood
Mezzanine, after the Closing, on the Partnership or (y) prevent or hinder the
consummation of the transactions contemplated hereby.
Section 3.3 Investment Representations. Starwood Mezzanine and its
requisite affiliates are "accredited investors" within the meaning of Rule 501
under the Securities Act of 1933, as amended (the "Securities Act"), and were
not organized for the purpose of acquiring limited partnership interests or
Units in the Partnership or Warrants or the Shares issuable upon exercise of the
Warrants of APT. Starwood Mezzanine and its requisite affiliates have sufficient
knowledge and experience in financial and business matters and in investing in
entities similar to the Partnership and APT so as to be able to evaluate the
risks and merits of its investment in the Partnership and APT and it is able
financially to bear the risks thereof. Starwood Mezzanine and its requisite
affiliates have had an opportunity to discuss the business, management and
6
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financial affairs of APT and the Partnership with the management of APT. The
limited partnership interest in the Partnership, the Units and the Warrants are
being acquired by Starwood Mezzanine and the Warrants were acquired by the
requisite affiliate of Starwood Mezzanine for their own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof. Starwood Mezzanine and its requisite affiliates understand
that (i) the limited partnership interest and the Units in the Partnership and
the Warrants have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, and (ii) such securities and, upon any issuance of
Class A Shares pursuant to the Exchange Agreement, the Trust Declaration, or the
Class A Warrant, such Class A Shares must be held indefinitely unless such Class
A Shares are registered upon receipt thereof, or unless a subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or is exempt from such registration.
Section 3.4 Litigation. To the knowledge of Starwood Mezzanine, there are
no actions, suits or proceedings or court orders or decrees pending or
threatened to which Starwood Mezzanine is a party or the Certificates are
subject or by which it is bound before or by any court or governmental agency,
which if determined adversely to the interests of Starwood Mezzanine would
reasonably be expected to either (a) have a Material Adverse Effect on Starwood
Mezzanine or the Certificates or, after the Closing, to the knowledge of
Starwood Mezzanine, on the Partnership or (b) prevent or hinder the consummation
of the transactions contemplated hereby.
Section 3.5 The Certificates. Attached hereto as Exhibit E is a true and
complete list of all material documents and instruments (the "Loan Documents")
evidencing and securing pass through participation certificates (the
"Certificates") to be contributed to the Partnership in their entirety. The
Certificates represent one hundred percent (100%) of the beneficial ownership in
a non-recourse first mortgage loan on the Warwick Hotel and Apartments located
in Philadelphia, Pennsylvania. As of January 1, 1996, the outstanding principal
balance on such mortgage loan was $5,203,192.13. The Certificates are free and
clear of all liens, encumbrances, mortgages, pledges, charges or adverse claims
and rights of others whatsoever other than as set forth in the Loan Documents.
Starwood Mezzanine has delivered to APT true and complete copies of the
documents listed on Exhibit E (as such documents were delivered to Starwood
Mezzanine upon its acquisition of the Certificates). Each of the Loan Documents
described on Exhibit E is in full force and effect, unmodified (except as
described therein) and is valid and enforceable against Starwood Mezzanine in
accordance with its respective terms and Starwood Mezzanine has no knowledge of
any default thereunder nor has Starwood Mezzanine any knowledge of an event or
condition that, with the giving of notice or passage of time shall result in a
default thereunder, except to the extent that such default or event or condition
would not have a material adverse effect on the Certificates or the Partnership.
Starwood Mezzanine has not received any notice that the borrower or Key Savings
Bank, as servicer under a certain Loan Document, has any defense, claim, offset
or counterclaim with respect to the Loan Documents. Starwood Mezzanine has not
consented to and Starwood Mezzanine has no knowledge of any subordination, non-
disturbance or attornment agreement with the owner or holder of a junior
mortgage, ground lessor or subground lessor on the real property subject to the
Loan Documents.
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Section 3.6 Proxy Statement. None of the information respecting the
Certificates Starwood Mezzanine or its affiliates supplied or to be supplied by
Starwood Mezzanine, its affiliates or any of its representatives for inclusion
in the Proxy Statement (as defined in Section 4.1) will, at the time of the
mailing of the Proxy Statement to the shareholders of APT and at the time of the
meetings of such shareholders referred to in Section 4.2., contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein relating to the Certificates, Starwood
Mezzanine or its affiliates not misleading.
Section 3.7 Employee Benefit Plans. Starwood Mezzanine is not (a) an
"employee benefit plan" as defined in and subject to the Employment Retirement
Income Security Act of 1974, as amended ("ERISA"), (b) a "plan" as defined in
and subject to Section 4975 of the Code or (c) an entity any portion or all of
the assets of which are deemed pursuant to United States Department of Labor
Regulation (S)2510.3-101 or otherwise pursuant to ERISA to be, for any purpose
of ERISA or Section 4975 of the Code, assets of any "employee benefit plan" or
"plan" described in clause (a) or (b) above which invests in such entity by
virtue of such investment.
Section 3.8 No Finder. Neither Starwood Mezzanine nor any party acting on
its behalf has paid or become obligated to pay any fee or any commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING DATE
APT and Starwood Mezzanine covenant and agree to take the following
respective actions between the date hereof and the Closing Date:
Section 4.1 Proxy Statement. APT has prepared and filed with the SEC a
proxy statement to solicit proxies in connection with the meetings of the
shareholders of APT referred to in Section 4.2 (the form of definitive such
proxy statement, together with any amendments thereof or supplements thereto,
mailed to the shareholders of APT in connection with such meetings is herein
referred to as the "Proxy Statement"). A true and complete copy of the Proxy
Statement (and all exhibits thereto) filed with the SEC has been delivered to
Starwood Mezzanine. APT will cause the Proxy Statement to comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the respective rules and regulations thereunder and will cause the Proxy
Statement, at the time of its mailing or delivery to the shareholders of APT and
at the time of the meeting referred to above, to not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by APT in reliance upon and in conformity with information concerning
Starwood Mezzanine, its affiliates and the Certificates furnished to APT by
Starwood Mezzanine, its affiliates or its representatives for inclusion in the
Proxy Statement. Starwood Mezzanine shall, and shall cause its representatives
to, furnish APT all information concerning itself, its affiliates and the
Certificates reasonably required for use in the Proxy Statement. If,
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at any time prior to the Closing Date, any event should occur which is required
to be described in an amendment of, or a supplement to, the Proxy Statement, APT
will cause such event to be so described, and such amendment shall be promptly
filed with the SEC and, as required by law, disseminated to any shareholders of
APT. Starwood Mezzanine and its affiliates will cooperate fully in connection
with such amendment or supplement, including supplying any and all information
with respect to Starwood Mezzanine, its affiliates and the Certificates which is
necessary to prepare any such amendment or supplement. The Proxy Statement
includes many proposals for shareholder approval in addition to the transaction
contemplated hereby. Subject to the last sentence of Section 4.2, APT shall not
amend or delete any of proposals relating to the transactions contemplated
hereby without Starwood Mezzanine's approval; it being understood that
shareholder approval of all such proposals (without any amendments thereto
objectionable to Starwood Mezzanine; notwithstanding the last sentence of
Section 4.2) shall be a condition to Starwood Mezzanine's obligation to close
the transactions contemplated hereby.
Section 4.2 Action by APT and Shareholders of APT. APT shall, as soon as
practicable after the Proxy Statement shall be cleared by the SEC, duly call,
give notice of, convene and hold a meeting of the shareholders of APT for the
purposes set forth in the Proxy Statement (collectively, the "APT Shareholders
Matters"). Subject to the fiduciary duties of the Board of Trustees of APT under
applicable law and to the last sentence of this Section 4.2, the Board of
Trustees of APT will recommend to its shareholders approval of the APT
Shareholder Matters. The Board of Trustees of APT may at any time prior to the
Closing Date withdraw, modify or change any recommendation regarding the APT
Shareholder Matters, this Agreement or the transactions contemplated hereby or
recommend and declare advisable any other offer, proposal or transaction if in
any such case it determines upon advice of legal counsel that the failure to so
withdraw, modify or change such recommendation could reasonably be expected to
involve it in a breach of fiduciary duties under applicable law.
Section 4.3 Lawsuits, Proceedings, Etc. Each party hereto shall notify the
other party hereto promptly upon becoming aware of any lawsuit, proceeding,
claim or investigation that may be threatened, brought, asserted or commenced
against it (a) involving in any way the transactions contemplated by this
Agreement or (b) that would have been listed or specified as an exception to
Sections 2.5 or 3.4, as the case may be, if such lawsuit, proceeding, claim or
investigation had arisen prior to the date hereof.
Section 4.4 Conduct of Business by APT and Starwood Mezzanine
Pending the Closing.
(a) During the period from the date of this Agreement through the
Closing Date, except as expressly contemplated by this Agreement, (i) APT shall
carry on its business in accordance with the ordinary course and shall not enter
into any material transaction with respect thereto, and (ii) Starwood Mezzanine
shall carry on its business with respect to the Certificates in, and not enter
into any material transaction with respect to the Certificates other than in
accordance with, the ordinary course (except, with respect to APT, with the
prior written consent of Starwood Mezzanine, and except, with respect to the
Starwood Mezzanine, with the prior written consent of APT).
(b) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the
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Closing Date, APT shall not, without the prior written consent of Starwood
Mezzanine (not to be unreasonably withheld):
(i) take any action that would cause it to fail to be taxed as a
REIT, for its taxable year ending December 31, 1996, or omit to take any
action necessary to cause APT to be taxed as a REIT for such taxable year;
(ii) acquire any real estate or other assets (other than receipt
of cash or investments of cash in cash equivalents);
(iii) issue or enter into any executory agreement to issue any
new debt securities;
(iv) issue or enter into any executory agreement to issue any new
equity securities other than common shares issued in replacement of lost,
stolen or transferred outstanding shares or as described in the Proxy
Statement; or
(v) declare and pay any dividends or make other distributions to
holders of shares other than as are necessary to preserve the REIT status
of the Trust or repay indebtedness.
Notwithstanding the foregoing, APT may take any action pursuant to clause
(b)(ii) above in order to preserve its status as a REIT if the Closing Date has
not occurred by September 30, 1996.
(c) Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement, during the period from the
date of this Agreement through the Closing Date, Starwood Mezzanine shall not,
without the prior written consent of APT (not to be unreasonably withheld):
(i) voluntarily sell, transfer or dispose of any portion of the
Certificates or Loan Documents;
(ii) take any action which would cause a default or an event of
default under the Certificates or Loan Documents; or
(iii) voluntarily encumber any of the Certificates or Loan
Documents.
Section 4.5 Mutual Cooperation; Best Efforts. Subject to the fiduciary
duties of the Board of Trustees of APT under applicable law, and the fiduciary
duties of general partners of Starwood Mezzanine under applicable law, the
parties hereto shall cooperate with each other, and shall use their respective
best efforts to cause the fulfillment of the conditions to the parties'
obligations hereunder and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third party, whether
private or governmental, required in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing shall not
require Starwood Mezzanine, any partner thereof, APT or the Partnership
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to make any divestiture or consent to any divestiture in order to obtain any
waiver, consent or approval.
Section 4.6 No Public Announcement. Neither party hereto shall, without
the approval of the other party hereto (which may not be unreasonably withheld),
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law, in which case the other party hereto shall be
advised and the parties hereto shall use their reasonable best efforts to cause
a mutually agreeable release or announcement to be issued.
Section 4.7 No Solicitation. From and after the date hereof, except as
otherwise permitted by this Agreement, APT will not, and will instruct its
officers and trustees not to, solicit or otherwise engage in any discussions or
negotiations with any person other than Starwood Mezzanine or any other entity
controlled by Starwood Capital Group, L.P. or its principals (a "Starwood
Controlled Party") relating to any Proposal (as hereinafter defined); provided,
however, that APT or its officers and trustees may engage in discussions or
negotiations with any person (provided that APT did not solicit such discussions
or negotiations on or after July 1, 1995) if the Board of Trustees of APT
determines in good faith upon advice of legal counsel that a failure to engage
in such discussions or negotiations could reasonably be expected to involve the
Board of Trustees of APT in a breach of fiduciary duties under applicable law;
and provided further, that nothing herein shall prevent the Board of Trustees of
APT from taking, and disclosing to the shareholders of APT, a position in
respect of a Proposal as contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. In the event that APT reaches an agreement with respect to a
Proposal with any person other than Starwood Mezzanine or a Starwood Controlled
Party, and such agreement is not consistent with the obligations of APT set
forth in this Agreement or with the transactions contemplated by this Agreement,
then, prior to entering into such agreement, APT will deliver the notice
provided in Section 8.1(g) and pay the expenses provided in Section 9.2. For
purposes of this Agreement, "Proposal" shall mean the following actions, as each
is presently contemplated in the Proxy Statement: (i) a recapitalization or
restructuring of APT, (ii) the creation of any UPREIT or DOWN REIT partnership
or other entity, (iii) a sale, disposition or refinancing of all or portions of
APT's assets, (iv) the issuance of any additional debt or equity securities of
APT or the Partnership, (v) the transfer in one transaction or a series of
related transactions of more than ten percent (10%) of the existing debt or
equity securities of APT, or (vi) the appointment to the Board of Trustees of
APT of trustees designated by a single person and its affiliates, other than as
designated by Starwood Mezzanine or a Starwood Controlled Party; provided,
however, that any transaction consented to by Starwood Mezzanine shall not be a
Proposal.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF APT
The obligations of APT under this Agreement to consummate the transactions
contemplated hereby to be consummated at the Closing shall, at the option of
APT, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
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Section 5.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Starwood Mezzanine in the
performance of its covenants and agreements herein to be performed at or prior
to the Closing Date; on the Closing Date, each of the representations and
warranties of Starwood Mezzanine that is qualified as to materiality shall be
true and correct as though made on the Closing Date; on the Closing Date, each
of the representations and warranties of Starwood Mezzanine that is not so
qualified as to materiality shall be true and correct in all material respects
as though made on the Closing Date; and there shall have been delivered to APT a
certificate or certificates to the foregoing effect, dated the Closing Date,
signed on behalf of Starwood Mezzanine.
Section 5.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on the
Certificates and the Loan Documents (taken as a whole); and there shall have
been delivered to APT a certificate or certificates to such effect, dated the
Closing Date, signed on behalf of Starwood Mezzanine.
Section 5.3 Opinion of Counsel for Starwood. APT shall have received from
Rinaldi & Associates, counsel for Starwood Mezzanine, an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to APT.
Section 5.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of APT and Starwood Mezzanine, however, that it shall use
its best efforts to prevent the entry of any such injunction or other order and
to appeal as promptly as possible any injunction or other order that may be
entered.
Section 5.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on APT,
Starwood Mezzanine, or, in addition, after the Closing, on the Partnership.
Section 5.6 Transaction Agreements. Each of the parties (other than APT)
to each of the Transaction Agreements and any other documents contemplated
hereby and thereby shall have entered into such Transaction Agreements and any
other documents contemplated hereby and thereby substantially in the forms
attached hereto as exhibits or, if not so attached, as agreed to by the parties.
Section 5.7 Shareholder and Stockholder Action. The Shareholders of APT
shall have approved by the requisite vote of the holders of Class A Shares and
Class B Shares, the Warrant Proposal (as defined in the Proxy Statement), the
Partnership Proposal (as defined in the Proxy Statement) and the Trust
Amendments Proposals (as defined in the Proxy Statement) and the nominees named
in the Proxy Statement shall have been elected to the APT Board of Trustees.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE
The obligations of Starwood Mezzanine under this Agreement to consummate
the transactions contemplated hereby to be consummated at the Closing shall, at
the option of Starwood, be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions:
Section 6.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by APT in the performance of its
covenants and agreements herein to be performed at or prior to the Closing Date;
on the Closing Date, each of the representations and warranties of APT that is
qualified as to materiality shall be true and correct as though made on the
Closing Date, on the Closing Date, each of the representations and warranties of
APT that is not so qualified as to materiality shall be true and correct in all
material respects as though made on the Closing Date; and there shall have been
delivered to Starwood Mezzanine a certificate or certificates to the foregoing
effect, dated the Closing Date, signed on behalf of APT. Without limitation of
the foregoing, the Class A Shares shall continue to be listed and publicly
traded on the AMEX.
Section 6.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on APT; and there
shall have been delivered to Starwood Mezzanine a certificate to that effect,
dated the Closing Date, signed on behalf of APT.
Section 6.3 Opinion of Counsel for APT. Starwood Mezzanine shall have
received from Katten Muchin & Zavis, counsel for APT, an opinion dated the
Closing Date, in form and substance reasonably satisfactory to Starwood
Mezzanine.
Section 6.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of APT and Starwood, however, that it shall use its best
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any injunction or other order that may be entered.
Section 6.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect an APT,
Starwood Mezzanine or, in addition, after the Closing, on the Partnership.
Section 6.6 Transaction Agreements. Each of the parties (other than
Starwood Mezzanine) to each of the Transaction Agreements and any other
documents contemplated hereby and thereby shall have entered into such
Transaction Agreements and any other
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documents contemplated hereby and thereby substantially in the forms attached
hereto as exhibits or, if not so attached, as agreed to by the parties.
Section 6.7 Shareholder and Stockholder Action. The Shareholders of APT
shall have approved by the requisite vote of the holders of Class A Shares and
Class B Shares, the Warrant Proposal (as defined in the Proxy Statement), the
Partnership Proposal (as defined in the Proxy Statement) and the Trust
Amendments Proposals (as defined in the Proxy Statement) and the nominees named
in the Proxy Statement shall have been elected to the APT Board of Trustees.
ARTICLE VII
INDEMNIFICATION; SURVIVAL
Section 7.1 Indemnification by APT. APT shall indemnify and hold harmless
Starwood Mezzanine, the Partnership and their respective subsidiaries,
affiliates, employees, agents, partners and successors from and against any and
all (x) liabilities, losses or damages ("Loss") and (y) reasonable out-of-pocket
expenses ("Expense") incurred by Starwood Mezzanine, the Partnership or their
respective subsidiaries, affiliates, employees, agents, partners and successors
in connection with or arising from (a) any breach or failure to perform by APT
of any of its agreements, covenants or obligations in this Agreement or any
Transaction Agreement or (b) any breach of any warranty or the inaccuracy of any
representation, or misrepresentation or material omission, of APT contained in
this Agreement, any Transaction Agreement, the Proxy Statement or in any
certificate delivered by or on behalf of APT pursuant hereto or thereto;
provided however, that the obligation of APT to indemnify and hold harmless
pursuant to this Section 7.1 shall be limited to the payment by APT in the
aggregate of an amount equal to Five Hundred Thousand Dollars ($500,000).
Section 7.2 Indemnification by Starwood Mezzanine. Starwood Mezzanine
shall indemnify and hold harmless APT and the Partnership and their respective
subsidiaries, affiliates, employees, agents, trustees, partners and successors
from and against any and all Loss and Expense incurred by APT or the Partnership
or their respective subsidiaries, affiliates, employees, agents, trustees,
partners and successors in connection with or arising from (a) any breach or
failure to perform by Starwood Mezzanine of any of its agreements, covenants or
obligations in this Agreement or any Transaction Agreement or (b) any breach of
any warranty or the inaccuracy of any representation, or misrepresentation or
material omission, of Starwood Mezzanine or its affiliates contained in this
Agreement, any Transaction Agreement, the Proxy Statement or in any certificate
delivered by or on behalf of Starwood Mezzanine or its affiliates pursuant
hereto or thereto; provided, however, that the obligation of Starwood Mezzanine
to indemnify and hold harmless pursuant to this Section 7.2 shall be limited to
the payment by Starwood Mezzanine in the aggregate of an amount equal to Five
Hundred Thousand Dollars ($500,000).
Section 7.3 Notice of Claims. If a party believes that any of the persons
entitled to indemnification under this Article VII has suffered or incurred any
Loss or incurred any Expense, whether or not the applicable dollar limitation
specified by Sections 7.1 or 7.2 has been exceeded, such party shall notify the
indemnifying party promptly in writing describing
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such Loss or Expense, the amount thereof, if known, and the method of
computation of such Loss or Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement, any Transaction
Agreement, the Proxy Statement or any certificate delivered pursuant hereto in
respect of which such Loss or Expense shall have occurred; provided, however,
that the omission by such indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its indemnification obligation under
this Article VII except to the extent that such indemnifying party is materially
damaged as a result of such failure to give notice. If any action at law or
suit in equity is instituted by or against a third party with respect to which
any of the persons entitled to indemnification under this Article VII intends to
claim any liability or expense as Loss or Expense under this Article VII, any
such person shall promptly notify the indemnifying party of such action or suit
as specified in this Section 7.3 and Section 7.4. Any party entitled to
indemnification hereunder shall use reasonable efforts to minimize any Loss or
Expense for which indemnification is sought hereunder.
Section 7.4 Third Party Claims. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party, the indemnified persons shall give such
notice thereof to the indemnifying party not later than twenty (20) business
days prior to the time any response to the asserted claim is required, if
possible, and in any event within fifteen (15) days following the date such
indemnified person has actual knowledge thereof; provided, however, that the
omission by such indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its indemnification obligation under this
Article VII except to the extent that such indemnifying party is materially
damaged as a result of such failure to give notice. In the event of any such
claim for indemnification resulting from or in connection with a claim or legal
proceeding by a third party, the indemnifying party may, at its sole cost and
expense, assume the defense thereof; provided, however, that counsel for the
indemnifying party, who shall conduct the defense of such claim or legal
proceeding, shall be reasonably satisfactory to the indemnified party; and
provided, further, that if the defendants in any such actions include both the
indemnified persons and the indemnifying party and the indemnified persons shall
have reasonably concluded based on a written opinion of counsel that there may
be legal defenses or rights available to them which have not been waived and are
in actual or potential conflict with those available to the indemnifying party,
the indemnified persons shall have the right to select one law firm reasonably
acceptable to the indemnifying party to act as separate counsel, on behalf of
such indemnified persons, at the expense of the indemnifying party. Unless the
indemnified persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, if an indemnifying party assumes
the defense of any such claim or legal proceeding, such indemnifying party shall
not consent to entry of any judgment, or enter into any settlement, that (a) is
not subject to indemnification in accordance with the provisions in this Article
VII, (b) provides for injunctive or other nonmonetary relief affecting the
indemnified persons or (c) does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such indemnified persons of a release
from all liability with respect to such claim or legal proceeding, without the
prior written consent of the indemnified persons (which consent, in the case of
clauses (b) and (c), shall not be unreasonably withheld); and provided, further,
that, unless the indemnified persons are represented by separate counsel
pursuant to the second proviso of the immediately preceding sentence, the
indemnified persons may, at their own expense, participate in any such
proceeding with the counsel of their choice without any right of control
thereof. So long as the indemnifying party is in good faith defending such
claim or proceeding, the
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indemnified persons shall not compromise or settle such claim or proceeding
without the prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld. If the indemnifying party does not assume the
defense of any such claim or litigation in accordance with the terms hereof, the
indemnified persons may defend against such claim or litigation in such manner
as they may deem appropriate, including, without limitation, settling such claim
or litigation (after giving prior written notice of the same to the indemnifying
party and obtaining the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld) on such terms as the indemnified
persons may deem appropriate, and the indemnifying party will promptly indemnify
the indemnified persons in accordance with the provisions of this Section 7.4.
Section 7.5 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive until
the first (1st) anniversary of the Closing Date (except for the representation
of APT pursuant to Section 2.6(b), which shall survive until the second (2nd)
anniversary of the Closing Date), at which time such representations and
warranties will terminate and be of no force and effect. Any claim under this
Article VII for Loss or Expense in respect of any representations and warranties
must be asserted in writing prior to the first (1st) anniversary of the Closing
Date, except for such a claim in respect of the representation of APT pursuant
to Section 2.6(b), which must be asserted in writing prior to the second
anniversary of the Closing Date. Notwithstanding the foregoing, if a claim of a
breach of a representation or warranty under this Article VII is asserted in
writing prior to the applicable time period set forth above in this Section 7.5,
then such representation or warranty, as it relates to such claim, shall survive
until the Loss or Expense in respect thereof, if any, is finally determined and
paid by the indemnifying party.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of APT and Starwood Mezzanine;
(b) by APT upon any material breach by Starwood Mezzanine of any of
its representations, warranties or covenants contained in this Agreement that is
not qualified to materiality and upon any breach by Starwood Mezzanine of any of
its representations, warranties or covenants contained in this Agreement that is
qualified as to materiality; provided that Starwood Mezzanine shall have been
given a reasonable opportunity to cure such breach;
(c) by Starwood Mezzanine upon any material breach by APT of any of
its representations, warranties or covenants contained in this Agreement that is
not qualified as to materiality and upon any breach by APT of any of its
representations, warranties or covenants contained in this Agreement that is
qualified as to its materiality; provided that APT shall have been given a
reasonable opportunity to cure such breach;
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(d) by APT if any of the conditions specified in Article V has not
been met or waived at such time as it is no longer possible to satisfy such
condition;
(e) by Starwood Mezzanine if any of the conditions specified in
Article VI has not been met or waived at such time as it is no longer possible
to satisfy such condition;
(f) by APT or Starwood Mezzanine if the Closing shall not have been
consummated on or before September 30, 1996; or
(g) by APT or Starwood Mezzanine, upon fifteen (15) days' prior
written notice, by APT to Starwood Mezzanine or by Starwood Mezzanine to APT, in
the event that, as set forth in Section 4.7, APT enters into an agreement with
any person other than Starwood Mezzanine or a Starwood Controlled Party which is
not consistent with the obligations of APT set forth in this Agreement or with
the consummation of the transactions contemplated by this Agreement (such notice
to include an explanation of such inconsistencies); provided that in entering
into such agreement APT materially complied with the provisions of Section 4.7.
For purposes hereof, an agreement with a party other than Starwood Mezzanine or
a Starwood Controlled Entity shall be deemed to be inconsistent with the
obligations of APT set forth in this Agreement in the event that such agreement
would impose any exclusivity or non-competition agreements on the Trust or
Partnership or would require a commitment of Trust or Partnership capital in
excess of $100,000 in the aggregate.
In the event that this Agreement shall be terminated pursuant to this Section
8.1, all further obligations of the parties under this Agreement (other than the
provisions of Article VII and Sections 9.1, 9.2, 9.10, 9.12 and 9.15) shall
terminate without further liability of any party to the others; provided,
however, that nothing herein shall relieve any party from liability for its
nonperformance or breach of any provision of this Agreement if performance of or
compliance with such provision was within its reasonable control.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 Confidential Nature of Information. Each party agrees that it
will treat in strict confidence all documents, materials and other information
which it obtains regarding the other party during the course of the negotiations
leading to the consummation of the transactions provided for herein and the
preparation of this Agreement; and if for any reason whatsoever the transactions
contemplated by this Agreement shall not be consummated, each party shall return
to the other party all copies of non-public documents and materials which have
been furnished or acquired in connection therewith and shall not use or
disseminate such documents, materials or other information for any purpose
whatsoever.
Section 9.2 Expenses.
(a) Except as otherwise provided in this Section 9.2, each of the
parties hereto shall bear its own costs and expenses (including, without
limitation, fees and disbursements of
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its counsel, accountants and other financial, legal, accounting or other
advisors) incurred by it in connection with the preparation, negotiation,
execution and delivery of this Agreement, each of the other documents and
instruments executed in connection with or contemplated by this Agreement,
including the Proxy Statement, and the consummation of the transactions
contemplated hereby and thereby (collectively "Acquisition Expenses").
(b) In the event of a Qualifying Termination (as defined below), then
within ten (10) business days after receipt by APT from Starwood Mezzanine of
reasonable documentation therefor, APT shall reimburse Starwood Mezzanine for
its reasonable out-of-pocket Acquisition Expenses.
For purposes of this Section 9.2(b), a "Qualifying Termination" shall mean
a termination of this Agreement pursuant to Section 8.1(g).
Section 9.3 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail, or four (4) days after being mailed (by
registered mail, return receipt requested) to a party at the following address
(or to such other address as such party may have specified by notice given to
the other parties pursuant to this provision):
If to APT to:
340 N. Westlake Boulevard
Suite 230
Westlake Village, CA 91362
Attention: Mr. Ronald J. Consiglio
Fax No.: (805) 449-1336
with a copy to:
Katten Muchin & Zavis
1999 Avenue of the Stars
Suite 1400
Los Angeles, CA 90067
Attention: James K. Baer, Esq.
Fax No.: (310) 788-4471
If to Starwood Mezzanine to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
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with a copy to:
Rinaldi & Associates
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Ellis Rinaldi, Esq.
Fax No.: (203) 861-2122
Section 9.4 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) an "associate" of any person means (i) a corporation or
organization of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of a class of
equity securities, any trust or other estate in which such person has
substantial beneficial interest or as to which such person serves as trustee or
in the similar capacity and (iii) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
director or officer of the person or any of its parents or subsidiaries.
(c) "Class A Warrant" means the warrant issued to SAHI Partners, a
Delaware general partnership, on March 15, 1994 and subsequently assigned to
Starwood Mezzanine for the purchase of up to 5,000,000 Class A Shares, subject
to adjustment.
(d) "Class B Warrant" means the warrant issued to SAHI Inc., a
Delaware general partnership, on March 15, 1994 for the purchase of up to
2,500,000 Class B Shares, subject to adjustment.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to the business, properties,
assets, condition (financial or otherwise) or results of operations of the
applicable person or persons.
(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
entity.
(h) "REIT Requirements" shall mean the requirements for APT to (i)
qualify as a REIT and (ii) avoid any federal income or excise tax liability.
(i) "Trust Declaration" means the Declaration of Trust of APT, as
proposed to be amended in the Proxy Statement.
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(j) "Warrants" means the Class A Warrant and the Class B Warrant.
Section 9.5 Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
Section 9.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors or assigns.
Section 9.7 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when APT and Starwood
Mezzanine shall have each executed one counterpart.
Section 9.8 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 9.9 Schedules and Exhibits. The schedules and exhibits referred
to in this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Section 9.10 Entire Agreement; Amendments and Waivers; Assignment. This
Agreement (together with the Transaction Agreements) contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein. The parties hereto, by mutual agreement in writing, may amend, modify
and supplement this Agreement. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach. Except as expressly
provided herein, the rights and obligations of the parties under this Agreement
may not be assigned or transferred by any party hereto without the prior written
consent of the other parties hereto.
Section 9.11 Governing Law. This Agreement, and the application or
interpretation thereof, shall be exclusively governed by its terms and by the
internal laws of the State of California, without regard to principles of
conflicts of laws as applied in the State of California or any other
jurisdiction which, if applied, would result in the application of any laws
other than the internal laws of the State of California.
Section 9.12 No Third-Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
person other than the parties hereto
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and successors and assigns permitted by Section 9.6 any right, remedy or claim
under or by reason of this Agreement.
Section 9.13 The Trust; Starwood General Partners. Each of the parties
hereto acknowledge and agree that (a) the name "Angeles Participating Mortgage
Trust" is a designation of APT and its Trustees (as Trustees but not personally)
under a Declaration of Trust, originally made and entered into as of April 15,
1988, as restated as of July 18, 1988, and all persons dealing with APT shall
look solely to the APT's assets for the enforcement of any claims against APT,
and the Trustees, officers, agents and security holders of APT assume no
personal liability for obligations entered into on behalf of APT, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations and (b) all persons dealing with Starwood Mezzanine
shall look solely to the assets of Starwood Mezzanine for the enforcement of any
claims against Starwood Mezzanine and the general partners of Starwood
Mezzanine, and the officers, agents and security holders of such general partner
assume no personal liability for obligations entered into on behalf of Starwood
Mezzanine, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations.
Section 9.14 Determinations and Interpretations by APT. All
determinations of the Trust (or the Board of Trustees of the Trust) provided for
in or pursuant to this Agreement shall be made by the Independent Trustees (as
defined in the Exchange Agreement). All interpretations of the terms of this
Agreement shall be resolved on behalf of the Trust by the Independent Trustees
(as defined in the Exchange Agreement).
Section 9.15 Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Central District of California in connection with any
action or proceeding arising out of or relating to this Agreement or any
Transaction Document and the transactions contemplated hereby and thereby, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
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Section 9.16 Approvals and Consents. Unless otherwise expressly set forth
herein, any agreement, approval or consent required a party hereto shall not be
unreasonably withheld or delayed.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or by their duly authorized officers, all as of the date
first above written.
ANGELES PARTICIPATING MORTGAGE TRUST,
a California business trust
By: ____________________________________
STARWOOD MEZZANINE INVESTORS,
L.P.
By: Starwood Capital Group,
L.P.
By: BSS Capital Partners,
L.P.
By: Sternlicht Holdings
II, Inc.
By: ________________
Its: ________________
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EXHIBIT 99.10
ASSIGNMENT AND ASSUMPTION
-------------------------
ASSIGNMENT AND ASSUMPTION, dated as of September 26, 1996 between STARWOOD
MEZZANINE INVESTORS, L.P., a Delaware limited partnership ("Assignor") and APMT
Limited Partnership, a Delaware limited partnership ("Assignee"):
For good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, and of the mutual covenants herein contained, the
parties hereto hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Certificateholder, in, to and under
that certain Participation and Servicing Agreement for Commercial Mortgage
Loans, Series 1988-10 through 14, dated as of March 1, 1988, by and between
Shearson Lehman Commercial Paper Incorporated and Empire of America Federal
Savings Bank, as subsequently assigned to Key Bank of New York (the "Company")
as of January 8, 1992 and as amended as of February 15, 1995 (as so assigned and
amended, the "Participation Agreement"), and that certain 100% "Pass-Through"
Ownership Certificate No. 5, Series 1988-10 (the "Certificate") issued
thereunder.
2. Assignor warrants and represents to, and covenants with, the Assignee
that:
a. Assignor is the lawful owner of the Certificate with the full
right to transfer the Certificate free from any and all claims and encumbrances
whatsoever;
b. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the Company with respect
to the Participation Agreement or the Certificate;
c. Assignor has not waived or agreed to any waiver under, or agreed
to any amendment or other modification of, the Participation Agreement or the
Certificate, including without limitation the transfer of the servicing
obligations under the Participation Agreement. Assignor has no knowledge of, and
has not received notice of, any waiver under or amendment or other modification
of, or assignment of rights or obligations under, the Participation Agreement or
the Certificate; and
d. Neither Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any Person (as
defined in the Participation Agreement) in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action which would constitute a distribution of the Certificate under
the Securities Act of 1933 (the "1933 Act") or which would render the
<PAGE>
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto.
3. Assignee warrants and represents to, and covenants with, the Assignor
and the Company pursuant to Section 4.02 of the Participation Agreement that:
a. Assignee agrees to be bound, as Certificateholder, by all of the
terms, covenants and conditions of the Participation Agreement and the
Certificate, and from and after the date hereof, Assignee assumes for the
benefit of each of the Company and Assignor all of Assignor's obligations as a
Certificateholder thereunder;
b. Assignee understands that the Certificate has not been registered
under the 1933 Act or the securities laws of any state;
c. In exchange for the Certificate being contributed by Assignor to
Assignee, Assignee will issue to Assignor, as of September 26, 1996,
approximately a 91.95% limited partnership interest in Assignee;
d. Assignee is acquiring the Certificate for investment for its own
account only and not for any other Person;
e. Assignee has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;
f. Assignee has been furnished with all information regarding the
Certificate that it has requested from Assignor or the Company; and
g. Neither Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any Person in
any manner which would constitute a distribution of the Certificate under the
1933 Act or which would render the disposition of the Certificate a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, nor will it
act, nor has it authorized or will it authorize any Person to act, in such
manner with respect to the Certificate.
4. This Assignment and Assumption shall be governed by the laws of the
State of Connecticut, without giving regard to conflict of laws principles
thereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
to be executed by their duly authorize officers as of the date first above
written.
ASSIGNOR: ASSIGNEE:
STARWOOD MEZZANINE INVESTORS APMT Limited Partnership,
L.P., a Delaware limited partnership a Delaware Limited Partnership
By: Starwood Capital Group, L.P., By: Angeles Participating Mortgage
a Delaware limited partnership Trust its general partner
By: BSS Capital Partners, L.P.,
Delaware limited partnership, By:
its general partner --------------------------------
Ronald Consiglio, Chairman
By: Sternlicht Holdings II, Inc.,
a Delaware corporation, its
general partner
By:
------------------------------
Name: Madison F. Grose
----------------------------
Title: Executive Vice President
--------------------------
