Exhibit 10.1
THE HOME INSURANCE COMPANY
59 MAIDEN LANE
TERM SHEET
AUGUST 1, 1997
CASH: (a) Home to pay $49,850,000 ("Cash Payment")
to Stroock & Stroock & Xxxxx, LLP, as
escrow agent ("Escrow Agent"), upon
Escrow Agreement Execution (as
hereinafter defined) to be held in
escrow until the closing ("Closing")
occurs in accordance herewith. Interest
will be paid to the party who is paid
the Cash Payment. Escrow Agreement
Execution shall be the date when the
parties have signed an escrow agreement
with the Escrow Agent. The Cash Payment
will accrue interest ("Interest") at the
three month T-bill rate until Closing or
such shorter investment period required
to conform to an anticipated date of
Closing.
(b) Home will consent to the irrevocable
release of the funds currently being
held by Xxxxxx Xxxxxx, as temporary
receiver, together with accrued interest
(and such additional funds which may be
recovered from Xx.Xxxxxx), to the
Trustee upon the Escrow Agreement
Execution. In the event that either (i)
the Closing contemplated hereunder does
not occur or (ii) the Closing occurs but
the components of the settlement (or any
part thereof) contemplated hereunder are
avoided or rendered null and void in the
context of a Rehabilitation (as defined
below) or otherwise, then the funds
delivered to the Trustee under this
subparagraph (b) shall remain the
property of the Trustee and shall be
deemed applied in respect of Justice
Xxxxxx X. Xxx's order dated December 30,
1996 entered in the action styled The
Home Insurance Company v. Olympia & York
Maiden Lane Company et al. (Index No.
603714/96).
(c) The funds held by the Escrow Agent will
be paid to the Trustee at the Closing.
The Closing will occur promptly after
all parties have approved the
transaction including (i) the Insurance
Commissioner of the State of New
Hampshire (the "Commissioner") and (ii)
the 59 Maiden Lane Bondholders pursuant
to a process reasonably satisfactory to
all parties.
(d) The Base Annual Rent and additional rent
(except with respect to the special
services described below) payable under
the New Lease (as hereinafter defined)
will be paid to the Escrow Agent and
shall constitute an additional Cash
Payment to be held pursuant to the terms
of the Escrow Agreement. Such amounts
for the period from June 1, 1997 to the
Escrow Agreement Execution will be paid
on the date of the Escrow Agreement
Execution. Thereafter, Base Annual Rent
and additional rent will be paid monthly
to the Escrow Agent and shall constitute
an additional Cash Payment to be held
pursuant to the terms of the Escrow
Agreement. Certain special services
being provided by the Landlord,
including cooling capacity for the main
frame computer located on the 4th Floor,
shall be paid by Home on a monthly basis
directly to the Trustee in accordance
with the present practice.
SUBTENANT INCOME: Commencing at Escrow Agreement Execution
and prior to Closing, Home will cause
all of its sublet income (the "Sublet
Income") received for the period June 1,
1997 and thereafter to be paid on a
current basis to the Escrow Agent as, if
and when collected from the subtenants
and which security deposits, if any, and
Sublet Income shall constitute an
additional Cash Payment to be held
pursuant to the terms of the Escrow
Agreement. After Closing, Home will
cause the Sublet Income, to the extent
paid, to be paid directly to the Trustee
and shall, at the option of the
Landlord/Trustee, assign the subleases
directly to the Landlord/Trustee. To
the extent that the Landlord/Trustee
causes Home to assign the subleases
directly to the Landlord/Trustee, Home
shall also transfer all security
deposits, if any, in respect of the
assigned subleases to the
Landlord/Trustee. Home shall promptly
deliver to the Trustee (i) a list of all
the subtenants including floor space,
the expiration dates of the subleases
and payment terms, and (ii) copies of
the subleases.
TAX CERTIORARI: Home will control (in coordination with
the Landlord/Trustee) all tax cert
proceedings and be entitled to its pro-
rata share of any recovery from all tax
cert proceedings for the open years
through June 30, 1996. Home will
indemnify the Landlord/Trustee for any
liability resulting from or arising out
of the acts of Home and its counsel with
respect to such tax cert proceedings in
connection with any claims asserted by a
tenant or other party claiming rights in
the tax cert proceedings, unless the
Landlord/Trustee has consented to the
acts of Home and/or its counsel.
Landlord/Trustee may retain its own cert
attorney who will be invited to all
meetings with the City of New York. Any
settlement of any tax cert proceedings
proposed by Home will be subject to the
reasonable consent of Landlord/Trustee.
OTHER CLAIMS: Landlord/Trustee will not release and
the parties hereto expressly acknowledge
that it is the intention that any
fraudulent conveyance claims (and any
claims related to the fraudulent
conveyance claims) Landlord/Trustee may
have against Zurich Insurance Company
and related companies (collectively,
"Zurich") in connection with the action
styled Marine Midland Bank v. Zurich
Insurance Company, Centre Reinsurance
International Company, Centre Reinsurance
Dublin, Risk Enterprise Management Limited,
and The Home Insurance Company (the "Fraudu-
lent Conveyance Action") are preserved
(except that Landlord/Trustee agrees not
to seek monetary damages against REM).
Home agrees that $64,922,134 reduced by
any rent paid under the New Lease (as
defined below) and any Sublet Income
from and after June 1, 1997 to the
extent that such amounts are received by
the Landlord/Trustee (the "Balance")
remains due and owing to the
Landlord/Trustee after the Closing, but
will only be payable by Home as
described below in connection with the
Structure. The parties will structure
("Structure") the transaction to
preserve the alleged claims against
Zurich in the Fraudulent Conveyance
Action. The Structure will be the
granting of a guaranty by Home that if
Landlord/Trustee obtains a judgment
against Zurich in the Fraudulent
Conveyance Action and Zurich is unable
to pay such judgment, then Home will be
responsible for the payment thereof. In
no event will Home be liable for more
than the Balance and any costs to the
extent awarded by a court against Zurich
in the Fraudulent Conveyance Action.
Xxxxxxx, Xxxx will deliver a reasoned
opinion that the Structure will provide
Landlord/Trustee with standing to
maintain the Fraudulent Conveyance
Action and that the claims set forth in
the Fraudulent Conveyance Action shall
not be deemed satisfied or rendered moot
as to Zurich as a result of the
settlement evidenced hereby and in the
definitive documents. The form of the
Skadden, Arps opinion will be delivered
prior to Contract Execution and the
final opinion will be delivered at
Closing. If Zurich pays any money to
Home in respect of any judgment rendered
in or any settlement of the Fraudulent
Conveyance Action (other than funds paid
by Zurich to Home under valid
indemnification obligations for legal
fees and expenses), Home shall
immediately pay such funds to the
Trustee. No release will be given by
the Landlord/Trustee regarding its
alleged fraudulent conveyance claims
against Home and Home intends to
vigorously defend such claims. Home
will not grant a release to Zurich of
the claims set forth in the Fraudulent
Conveyance Action.
COMMISSIONER'S
ASSURANCES: Prior to the Closing, the Commissioner
shall grant the following assurances
that it can grant that (i) the
transaction described herein will not be
adversely affected by a liquidation or
rehabilitation of Home (collectively,
"Rehabilitation"), (ii) it will not
attempt to avoid or recover any funds
paid hereunder or in accordance with the
terms hereof, (iii) it will not attempt
to block payment of rent set forth
herein from being paid to
Landlord/Trustee, subject to the
occurrence of a Rehabilitation, and (iv)
if the Landlord/Trustee prevails in the
Fraudulent Conveyance Action, the
Commissioner will not attempt to avoid
or recover any funds payable by Zurich
or Home. If the components of the
settlement hereby (or any part thereof)
are avoided or rendered null and void in
the context of a Rehabilitation or
otherwise, then all parties' claims and
defenses will be reinstated as if the
transaction described herein had never
been consummated, provided however, that
the funds released by Xxxxxx Xxxxxx
shall remain the property of the
Trustee.
LEGAL OPINIONS: Home will use reasonable efforts to
deliver the form of a reasoned opinion
of counsel (based upon various
assumptions) upon Contract Execution
that in the event of a Rehabilitation
(a) the preference period applicable to
the distribution of the Cash Payments to
the Trustee will commence on the date of
Contract Execution or such later date of
payment (although counsel will consider
the Escrow Agreement Execution to be the
possible date of such commencement) and
(b) such preference period will be four
(4) months. Contract Execution will be
deemed to be the date the parties
execute mutually acceptable, binding
agreements, incorporating the terms
contained in this Term Sheet, which date
must occur on or prior to the Deadline
set forth herein. The final opinion, if
any, will be delivered at Closing.
MUTUAL RELEASES: At Closing, the parties (and Home
Holdings, Inc. and REM) will deliver
mutual releases with respect to the
claims and counterclaims which are or
might have been asserted in the
litigation The Home Insurance Company
vs. Olympia & York Maiden Lane Company,
et al. (Index No. 603714/96) (the "Rent
Action"). Excluded from such releases
will be the Balance owed to the
Landlord/Trustee by Home provided that
such exclusion shall not provide
Landlord/Trustee with a basis to seek a
recovery against REM or Home, except
under the Structure, in connection with
the Fraudulent Conveyance Action.
LEASE: Home and Landlord/Trustee will execute a
new lease (the "New Lease") for a period
of 3 years and 7 months pursuant to the
following terms:
* SPACE/AREA: From June 1, 1997 through January 1,
1998, Home will occupy approximately
271,000 sf. Home will occupy
approximately 195,000 sf commencing
January 1, 1998 through December 31,
1998. Thereafter Home will occupy
approximately 147,000 sf. Home will
continue to occupy storage space in the
plaza and basement areas containing
approximately 14,000 sf.
* COMMENCEMENT
DATE: June 1, 1997.
* TERM: Three years and seven months commencing
June 1, 1997.
* BASE ANNUAL
RENTAL RATE: * June 1, 1997 to December 31, 1998:
$25.00 psf
* January 1, 1999 to December 31,
1999: $26.00 psf
* January 1, 2000 to December 31,
2000: $27.00 psf
* Storage Space: $8.00 psf
* RENT
COMMENCEMENT: June 1, 1997.
* ELECTRIC: $2.00 psf (not included in Base Annual
Rental Rate). The plaza and basement
will be excluded from this payment.
* ESCALATIONS: Home to pay its proportionate share of
increases in the building's actual
operating costs and Real Estate taxes
over the 1997 calendar year for
operating expenses and the July 1, 1996
to June 30, 1997 fiscal year for real
estate taxes (as finally determined
pursuant to a cert proceeding).
* GUARANTY: Risk Enterprise Management Limited
("REM") will guaranty the payment of
Base Annual Rent and additional rent by
Home pursuant to the New Lease
commencing on June 1, 1997 and ending on
the earlier of (a) December 31, 2000,
(b) the date REM ceases for any reason
whatsoever to manage Home or (c) the
occurrence of a Rehabilitation.
* BUILDING
SERVICES: Landlord shall provide all services
normally provided in a first-class
building including, without limitation,
heating, ventilating and air
conditioning, maintenance and repair,
elevator service, cleaning, security,
etc. The cost for providing such
services will either be included in
Escalations (as set forth above) or paid
directly by tenant (as currently
provided in the existing lease).
Landlord will provide cooling capacity
for the mainframe computer located on
the 4th floor, if required, to be paid
by tenant based upon the existing lease.
* BROKERAGE
FEES: None.
* CONDITION OF
PREMISES: Home shall take the premises described
herein in its "as is" condition as of
the date of Closing. Home expressly
waives its right to assert any of the
claims or defenses that it asserted in
the Rent Action as a defense to the
payment of rent or any other charges due
under the New Lease.
DEADLINES: The parties will (a) execute and deliver
the documents required for the Contract
Execution no later than August 31, 1997
and (b) complete the Closing no later
than December 31, 1997, unless (i) such
dates are extended by mutual agreement
of the parties or (ii) in the event that
a bankruptcy proceeding is filed by or
against Olympia & York Maiden Lane
Company LLC and/or Olympia & York Maiden
Lane Finance Corp., the Closing date may
be extended until the conclusion or
dismissal of such bankruptcy
proceeding(s).
STANDSTILL AGREEMENT: The parties shall enter into a
stipulation whereby such parties agree
that, prior to September 1, 1997 or such
later date as shall be agreed to by all
of the parties, (a) Home need not post a
surety bond in order to stay execution
on the judgment issued on July 2, 1997,
(b) Landlord/Trustee shall not take any
actions to execute on the judgment and
(c) no pleadings shall be filed by Home
to the Appellate Division, including the
appeal of the July 2, 1997 judgment.
AGREED AND CONSENTED TO:
THE HOME INSURANCE COMPANY MARINE MIDLAND BANK, AS
SUCCESSOR INDENTURE TRUSTEE
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Metin Caner
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx Xxxxx
Title: President & Chief Title: Vice President
Operating Officer
RISK ENTERPRISE MANAGEMENT XXXXXXXX X. XXXXX, AS RECEIVER
LIMITED FOR OLYMPIA & YORK MAIDEN
LANE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxxxxx Xxxxxxxx X. Xxxxx
Title: Executive Vice President,
Chief Financial Officer &
Treasurer
